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SOCIAL AND ECONOMICCHANGE MONOGRAPHS

DEVELOPMENT POLICIES,PRIORITIES AND SUSTAINABILITYPERSPECTIVES IN INDIA

SHASHANKA BHIDEJEENA T. SRINIVASAN

Institute for Social and Economic ChangeBangalore2004

6

SOCIAL AND ECONOMIC CHANGE MONOGRAPH SERIES

Number 6 January 2004

ISBN 81-7791-105-8

Series Editor : G. K. KARANTH

© 2004, Copyright ReservedThe Institute for Social and Economic ChangeBangalore

Institute for Social and Economic Change (ISEC) is engaged in in-terdisciplinary research in analytical and applied areas of social sci-ences, encompassing diverse aspects of change and development.ISEC works with central, state and local governments as well asinternational agencies by undertaking systematic studies of resourcepotential, identifying factors influencing growth and examining mea-sures for reducing poverty. The thrust areas of research include stateand local economic policies, issues relating to sociological and de-mographic transition, environmental issues and fiscal, administra-tive and political decentralization and governance. It pursues fruit-ful contacts with other institutions and scholars devoted to socialscience research through collaborative research programmes, semi-nars, etc.

The Social and Economic Change Monograph Series provides anopportunity for ISEC faculty, visting fellows and PhD scholars todisseminate their ideas and research work. Monographs in the seriespresent empirical analyses and generally deal with wider issues ofpublic policy at a sectoral, regional or national level.

Publication of this Monograph has been made possible through the generoussupport of Sir Ratan Tata Deferred Endowment Fund.

CONTENTSPage No.

List of Tables

List of Figures

AbbreviationS

Preface

CHAPTER I The Development Process and Priorities 1

1 Introduction 1

2 Development Policy Objectives and Priorities 3

3 Raising the Standard of Living: Trends in Income,

Consumption and Social Indicators 5

4 Regional Dimension of Development 15

5 Poverty Reduction 18

6 Inequality of Consumption 25

7 Employment 25

8 Sustainability of Progress 31

CHAPTER II Strategies and Programmes for Development 69

1 Institutions for Development 69

2 The Mixed Economy Approach 83

3 Government Expenditures for Development 86

4 Regulatory Mechanisms 87

CHAPTER III Development and Sustainability Perspectives 96

1 Agriculture and Sustainable Development 96

2 Industry 101

3 Infrastructure Development 108

4 Globalisation and Modernisation of the Economy 114

CHAPTER IV Summing Up 118

References 134

PREFACE

India’s development policies have been complex and wide-rangingin their scope. Over the last five and a half decades, the policy process hasbeen evolutionary. There has been some continuity in the process duringthis long period because economic planning remained critical for decisionsrelating to the allocation of resources. At the same time, different issuestook the centre stage in different periods resulting from the actions of thepast as much as the exogenous events.

This monograph is an attempt to capture the evolution of policies inthe context of the concerns relating to sustainable development. The canvasis broad and we have attempted to keep the focus on the sustainabilityperspectives. We have viewed the concept of sustainability in a broadercontext of development and the use of natural resources. Our attempt is topresent a review of the policies based on the documentation available fromofficial sources. We have not provided a critical evaluation of the policiesbut only a summarisation of the policy efforts as they relate to sustainabledevelopment. The objective is to provide a basis for further discussion anddebate.

This work is an outcome of a research project commissioned bythe Ministry of Environment and Forests through Winrock International India,New Delhi under the National Communication on Climate Change. Thegrant was made to the Institute for Social and Economic Change, Bangalorewhere the present research was undertaken.

The authors are grateful to Prof. Gopal K. Kadekodi, Director,ISEC, who gave many suggestions and guidance in the conduct of the projectand also on the earlier drafts of this monograph. We also wish to acknowledgethe excellent research assistance provided by Ms. G. Aparna. We are alsograteful to Mr. B.H.Chandrashekara for the efficient secretarial assistance.Valuable editorial help from Mr. Parthasarathy led to many improvementsin the manuscript.

The authors are grateful to the sponsors of the research project forpermission to publish this monograph based on the study report.

Shashanka BhideBangalore T.S. Jeena

FOREWORD

There have been many attempts in the past to provide reviews ofIndian economic development both at the conceptual and empirical levels.The Institute for Social and Economic Change, Bangalore was presentedwith a unique opportunity to review the national development policies andpriorities since the Indian Independence keeping in view the sustainabilityperspectives. This research was commissioned by the Ministry ofEnvironment and Forests, New Delhi through Winrock International India.The study is an attempt to bring together policies and programmes at thenational level framed to bring about economic development that is sustainableinto the future.

Although there were differences in the degree of emphasis, India’seconomic policies have relied largely on the public sector initiatives to achievethe goals of development. Emphasis has been placed on the development ofdemocratic political institutions. Raising the standard of living for thepopulation as a whole has been the key objective of the planning process.However, concerns relating to sustainable use of natural resources haveemerged in this process early in the 1980s. The extent to which the goals ofsustainable development and economic growth can be combined in policywould depend on the ability of policy makers to understand the implicationsof each policy measure on one another.

The present research is an attempt to bring together diverse threadsof policy to focus on development and sustainability of development. Therehave been changes and turns in economic policies, especially with respectto strategies and instruments. In the decade of the 1990s, the economicpolicies became more liberal leaving far greater space for the markets indecisions relating to allocation of resources. The new policy regime, however,has recognised the need for pubic interventions to safeguard sustainableuse of natural resources and also protect the weaker sections of the societyfrom market failures.

What would be the next generation of policies? This monographonly presents a basis for discussions. Its aim is modest, to provide a summaryof past policies and developments with an underlying concern on sustainabledevelopment.

December 2003 Gopal K. KadekodiBangalore Director, ISEC

LIST OF TABLES

1 Objectives Reflecting the Priorities in India’s Five-YearPlans 7

2 Trends in GDP, Population and Per Capita GDP 113 Changing Pattern of Consumer Expenditure 134 Improving Health and Education 145 Health Infrastructure, Decline in the Threat of

Major Diseases 156 India’s Ranking in HDI 167 Per Capita Income (GSDP) and Growth Rate of Per

Capita GSDP for Selected States 178 Selected Indicators of Human Development Across States 199 Human Development Index 1981, 1991 and 2001

(Arranged in Rank Order of 1991) 2010 State Level Incidence of Poverty (Per Cent of Population) 2211 Some Major Programmes Aimed at Providing Relief to

the Poor 2612 Trends in Consumption Inequality 2813 Estimated Workforce (Employment in Million) 2914 Growth of Population, Labour Force and Employment:

Per Cent Per Year 3015 Area under Different Land Use Categories in India

(Million Hectares) 4016 Extent of Soil Degradation (Human Induced) by Type of

Degradation (in Million Hectares) 4217 Classification of Wastelands 4318 Water Requirement for Different Uses (Quantity in Km3) 4719 Fish Production in India (in Million Tonnes) 5020 Growth of Marine Products Export from India 5121 Classification of Total Forest Area (km2): 1951–52 to 1999 5522 Land Cover as Per 1987, 1997 and 2001 Assessments in

India 5623 Contribution (Million Rupees) of Forestry and Logging to the

Gross Domestic Product and its Percentage Share:1980–81 to 1996–97 57

24 Value of Output (Million Rupees) from Forestry and Logging:1980–81 to 1994–95 57

25 Scenario of Industrial Wood (Million Cubic Metres) 58

26 Decadal Rate of Growth of Population 6627 State Level Variations in the Growth Rates of Population

for the Recent two Decades (Per ’000) 6728 Orientation of Social Forestry and Joint Forest Management

Programmes 7529 Share of Public Sector in GDP (per cent) 8530 Gross Capital Formation as a Percentage of GDP at

Current Prices by Type of Institutions at Current Prices 8631 Pattern of Capital Formation within Public Sector by

Type of Industry 8732 Government Expenditure in the Major Sectors as

Per Cent of GDP: Centre and States Combined 8833 Growth Rates of Agricultural Production: Per Cent

Per Year 9634 Rate of Growth (%) of Industrial Output (Index of

Industrial Production) 10235 Trends in Infrastructure Development

(Per ’000 Population) 10936 Some Measures of Modernisation of the Economies

(Year 2000) 114

LIST OF FIGURES

1 Per Capita GDP at Market Prices (US $): End of EachFYP Period 10

2 Changing Structure of the Economy: Share of Sectors inGDP at 1993-94 Prices 11

3 Trends in Per Capita Consumption Expenditure at1993-94 Prices (Rs) 12

4 Per Capita Income (1999-2000) and Projected Growthin X Plan: Major States 18

5 Trends in Poverty: The Head Count Ratio 216 Trends in the Structure of Employment (Per Cent Shares) 297 Distribution of Employment (Per Cent Shares of

Organised and Unorganised Sectors: 1999-2000) 308 Share of Public Sector in Organised Sector Employment

(Per Cent) 319 Trends in Inflation: Per cent Change in Consumer Price

Index for Industrial Workers (CPI (IW) and WholesalePrice Index (WPI)) 32

10 Trends in Current Account Deficit (Per Cent of GDP) 3311 Food Grain Stock (End of March) As Per Cent of PDS

Off-take of the Previous Year 3312 Foreign Exchange Reserves as Months of Import Cover:

End of Each Plan Period 3413 Openness to Trade: Ratio of Trade to GDP (Per Cent)

During FYPs 3514 Trends in Gross Fiscal Deficit as Percentage of GDP for

Centre and States 3615 Rising Non-Development Expenditure Shares (Per Cent):

Centre and State Governments 3716 Energy Generated Per Capita and Per Rupee of Real

GDP: Indices with 1950-51 = 100 6417 Investment (GDCF) and Saving (GDS) as a Percentage

of GDP at Market Prices 8418 Decomposition of Crop Output Growth: Per Cent Change

in Crop Output and Area 9719 Growth of Machinery Use in Agriculture: Tractors and

Pumpsets 9820 Growth in Irrigation, Fertiliser and HYV Seeds 9921 Growth in Manufacturing Value Added: Per Cent

Annual Averages During the FYPs 10322 Share (%) of Unregistered Manufacturing in Sectoral GDP 10523 Distribution (%) of GDP from Unregistered

Manufacturing Across Sectors 10624 Trends in the Output of Infrastructure Sectors: Share (%)

in GDP in Constant Prices 10925 Sectoral Shares of FDI (Percentage Distribution) 116

ABBREVIATIONS

AMUL Anand Milk Union LimitedARWSP Accelerated Rural Water Supply ProgrammeAUWSP Accelerated Urban Water Supply ProgrammeBSI Botanical Survey of IndiaBPO Business Process OutsourcingCAD Current Account DeficitCADP Command Area Development ProgrammeCBD Convention on Biological DiversityCBR Crude Birth RateCDR Crude Death RateCETP Common Effluent Treatment PlantCNG Compressed Natural GasCPCB Central Pollution Control BoardCPR Common Property ResourceDDP Desert Development ProgrammeDPAP Drought Prone Area ProgrammeDPC District Planning CommitteeDWCRA Development of Women and Children in Rural AreasEAS Employment Assurance SchemeEPA Environmental Protection ActFCCC Framework Convention on Climate ChangeFDI Foreign Direct InvestmentFPC Forest Protection CommitteeFSI Forest Survey of IndiaFYP Five Year PlanGDP Gross Domestic ProductGEF Global Environment FacilityGHG Green House GasesGOI Government of IndiaGSDP Gross State Domestic ProductHDI Human Development IndexHYV High Yielding VarietiesIMT Irrigation Management TransferIPCC Intergovernmental Panel on Climate ChangeIPCP Industrial Pollution Control ProjectIPS Investment Promotion SchemeIRDP Integrated Rural Development ProgrammeIT Information TechnologyIWDP Integrated Watershed Development ProgrammeJFM Joint Forest ManagementJRY Jawahar Rozgar YojanaLPG Liquid Petroleum GasMFAL Marginal Farmers and Agricultural LabourersMINARS Monitoring Indian National Aquatic Resources Systems

MNP Minimum Needs ProgrammeMoEF Ministry of Environment and ForestsMoWRD Ministry of Water Resources DevelopmentMSW Municipal Solid WasteNABARD National Bank of Agriculture and Rural DevelopmentNBSAP National Biodiversity Strategy and Action PlanNDC National Development CouncilNGO Non-Governmental OrganisationNLCB National Land Use and Conservation BoardNLWDC National Land Use and Wasteland Development CouncilNRCP National River Conservation ProgrammeNREP National Rural Employment ProgrammeNRY Nehru Rozgar YojanaNSAP National Social Assistance ProgrammeNTFPs Non-Timber Forest ProductsNWDB National Wastelands Development BoardNWDPRA National Wasteland Development Project for Rainfed AreasNWMP National Water Management ProjectODS Ozone Depleting SubstancePIM Participatory Irrigation ManagementPMGY-RDW Pradhan Manthri Gramodaya Yojana – Rural Drinking WaterPRI Panchayati Raj InstitutionR & D Research and DevelopmentRLEGP Rural Landless Employment Guarantee ProgrammeRMK Rashtriya Mahila KoshSEWA Self-Employed Women’s AssociationSFDA Small Farmers’ Development AgencySGRY Sampoorna Gramin Rozgar YojanaSGSY Swarna Jayanti Gram Swarojgar YojanaSHG Self-Help GroupsSIDBI Small Industries Development Bank of IndiaSJSRY Swarna Jayanti Sahari Rozgar YojanaSPM Suspended Particulate MatterSSIs Small Scale IndustriesTDET Technology Development Extension and TrainingTEDDY Tata Energy Data Directory and Year BookTERI Tata Energy Research InstituteUNDP United Nations Development ProgrammeUNEP United Nations Environment ProgrammeVFC Village Forest CommitteeWDF Watershed Development FundWDPSCA Watershed Development Programme in Shifting Cultivation AreasWDR World Development ReportWHO World Health OrganisationWUAs Water User’s AssociationsZSI Zoological Survey of India

CHAPTER I

THE DEVELOPMENT PROCESS AND PRIORITIES

1. IntroductionIndian economy has been among the top 15 fastest growing

economies in the world for the last two decades. This has led to expectationsof even better performance in the coming decade. The change from arelatively slow growing economy in comparison to the performance of themore successful economies of East, South-east Asia and China to one ofhigh growth has also led to renewed emphasis on achieving significantreduction in poverty and providing basic minimum services such as healthand education to a population of more than one billion citizens today. WhileIndia is still among the poor countries in the world with a per capita GDP ofUS$460, its skilled labour force, strong technical capabilities and increasingopenness to trade and investment have raised the potential for sustainedfaster economic growth. The X Five Year Plan (FYP)1 of the country hasset an ambitious goal of 8 per cent annual growth in GDP in constant pricesover the next five years. India clearly has a long way to traverse ondevelopment path before the cherished goal of the nation’s founders in freeingher people from economic backwardness can be realised.

When India achieved its independence from the colonial rule it facedthe challenges of its survival as a united free nation. Political freedom fromColonialism in 1947 marked the beginning of a national endeavour to achievefreedom from poverty and backwardness arising from decades of economicstagnation. Focus on achieving better standards of living to all the citizenshas been a continuing theme in Indian policies. Over the last fifty-five yearssince independence there have been new policy challenges as well. Relativelyslow economic progress in the first three decades since independence ledto a search for new policies. The shocks from nature in the form of faminesand floods led to strategies for self-sufficiency in food. The external shocksof sharp oil price hikes in the early 1970s and in the late 1970s led to a focuson new energy policies. The wars with neighbours had their own impact onpriorities on resource allocation for development. Through over five decadesof efforts at economic and social development the nation has recognisedthe need for a sustainability perspective in all the development efforts.Sustainability of development in terms of continued economic growth, socialprogress, protection and preservation of natural resources and environmentfor posterity has found expression in all the policies, especially in the lasttwo decades. The corner stone of economic policies is still eradication of

poverty. However, eradication of poverty is also consistent with sustainabilityof development. The economic policies, therefore, must focus on sustainabledevelopment as they do on poverty eradication.

In this paper we review the development policies and priorities inIndia in the last five and a half decades. The review identifies the key areasof focus in government policies. We maintain the perspective of sustainabilityin the development process in the review. The development policies areclearly quite wide ranging as they touch all aspects of nation’s life. Ourfocus, therefore, will be on key areas of development policies by whichresource allocations are effected, by which development is, in fact, measuredand by which development can be sustained.

We draw attention to various policy measures relating to sustainabledevelopment do not offer a critique of these efforts on a systematic basis asthis would requires analyses much beyond the scope of this paper. Joshiand Little (1994 and 1996) are among the excellent sources of analyticalassessment of India’s macro-economic management. The review drawsheavily on the process of FYPs of India. The changing concerns of publicpolicy in India are best traced in the evolution of the FYPs that reflect theoverall national goals and policies towards development. India resorted toplanning process as a means to launch a coherent development programme.The planning process adopted a systematic review of the existing social andeconomic scenario, set for itself specific development goals and came upwith programmes and strategies to achieve the goals. In this exercise ofFYPs, the changing perspectives on policies as influenced by past experience,new knowledge and new circumstances found an expression in the re-orientation of priorities or new approaches to the same problems. In thissense, the FYPs provide a comprehensive review of the policy perspectiveson development in the country.

The review of development policies and priorities presented here isorganised in three main chapters. In Chapter I, we first provide an overviewof the focus in the planning effort as indicated by the specific objectives ofthe various FYPs. This is followed by a discussion of trends in some of thevariables reflecting major concerns of policy. For example, trends in overalleconomic growth, structure of the economy and pattern of consumptionthat is emerging over time. In Chapter II, we provide a discussion of strategiesthat were adopted for implementing the policy objectives. The final Chapterprovides the sustainability perspectives in some of the major sectoraldevelopment policies.

Development Policies, Priorities and Sustainability Perspectives in India 2

2. Development Policy Objectives and PrioritiesThe First FYP launched in 1950 noted that industrial development,

urbanisation and expansion of commerce had taken place in the previousfew decades (Planning Commission, 1951). But it went on to point to thelimited nature of this progress and noted that 83 per cent of the country’spopulation residing in the rural areas suffered from chronic underemploymentand low income. Rapid economic development was a key policy imperativefor the new government. The new nation was diverse in terms of social andcultural milieu. It was large in terms of both population and geography andadopted a democratic and constitutional form of government. It was also agovernment of a federal nature with the powers and responsibilities ofgovernance divided between the states and the central government. Thestrategy for development, therefore, had to be formulated in a manner thathad the support of a large section of the population.

The government of the time adopted ‘planning’ approach todevelopment policy. Planning was to be a participatory process with theinvolvement of all sections of the society. The planners were given a mandatebased on the constitutional assurance to the citizens of right to livelihood.Planning was also to focus on the ways to improve the economic situationof the poor and downtrodden with the objective of building a ‘socialisticpattern of society’.

This objective of economic growth with equity, interwoven in anumber of other broad development goals was pursued in the successiveFYPs that were launched since 1950. The FYPs were used to provide acohesive statement of the development objectives and priorities. The plansalso provided the strategies and allocation of national resources to achievethese objectives. India’s Planning Commission, set up in March 1950, wascharged with the task of initiating programmes and policies for bringingabout rapid improvements in the citizens’ incomes and ensuring that thewider goals of equity are met. Common good was the constant refrain inthe responsibilities entrusted to the Planning Commission. The PlanningCommission, composed of members who are experts in various fields hasthe Prime Minister as its Chairman. To overcome the conditions of povertyand backwardness, planning was meant to be a rational solution to theproblems attempting to co-ordinate means and ends. And it was neverimprovements in incomes alone that the plans pursued. The first FYPdocument observed that the central objective of planning is to createconditions in which living standards are reasonably high and all citizens,men and women should have full and equal opportunity for growth and

The Development Process and Priorities 3

service. The objective was not only to build up a big productive machine,which is a necessary condition of development, but at the same time to alsoimprove health, sanitation and education and create social conditions forvigorous cultural advance. The I FYP declared that, planning must meanco-ordinated development in all these fields.

In the context of a democratic and pluralistic society, it was importantfor the planners to impart strong elements of participatory and broad-basedcharacteristics to the process of planning to make the process sustainable.Right from the beginning, the planning process explicitly noted the need forfull support for the development efforts from across all segments of thesociety. The FYPs were made with much debate and discussion acrossdifferent segments of the society. At the political level, the federal nature ofthe government required consultations between the Central governmentand the State governments. With the policy making in a democratic setting,the FYPs could not ignore the diversity of views on many aspects of policyin political life.

The first FYP noted the need for evolving consensus on key policyobjectives both across the political parties and between the Centralgovernment and the State governments given the federal nature of the Indiannation. The instrument for bringing about the national consensus, particularlyamong the states and the Central government was the National DevelopmentCouncil set up in 1952. The NDC comprises of the Prime Minister and theCabinet of the Central government and the Chief Ministers of the Stategovernments. The Chief Ministers of the States are consulted by the PlanningCommission while formulating the approach to FYPs. The FYPs areapproved by the NDC at different stages of the plan formulation process,starting with the approach to the plan to the final plan itself.

Planning clearly cannot be a rigid approach to policy. It has to respondto the changing and unanticipated situations, both on the domestic andinternational fronts. While the original objectives of planning, to eliminatepoverty and raise the standard of living of its people have remained, explicitlyor otherwise, in all the ten FYPs formulated to-date, the changing concernsover time can be seen in the objectives enunciated in different plans.

Each FYP put forward the thrust of the plan in its statement ofobjectives. Clearly, setting specific targets and objectives to articulatestrategies and programmes to meet these specific objectives is an integralprocess of planning. Thus, although growth of national income or per capitaincome is an implicit goal in all the FYPs, it is not given the same emphasisin all the FYPs. To understand this emphasis, we reviewed those goals thatwere explicitly noted as objectives in the various FYPs and summarised in


Table 1 the key concerns expressed in the statement of objectives. Thetable provides an overview of the changing emphasis that the various FYPsseem to reflect. For instance, all FYPs have a target of national income butit is not explicitly stated in the discussion of objectives of the plan in eachFYP.

The evolution of the plan objectives clearly has an underpinning ofthe goal of reduction or elimination of the poverty and at the same time toachieve development in a variety of dimensions. There is a focus onparticular goal or even an instrument in some of the plans addressing specificconcerns and circumstances of the times. For example, concerns on foodsecurity and energy security expressed in the IV FYP and VI FYP,respectively, follow the impact of severe drought in the 1960s and the oilprice shock of 1979. The concern on unemployment and the need to generatejobs arise from the massive additions to the labour force from a growingpopulation and the strains in the policy that is caused from unemployment oflarge proportions.

The importance of poverty reduction and generation of employmentdid not deter the planning process from addressing the concerns relating toenvironment and technology development more explicitly. There has beenan attempt to approach both sets of issues in a complementary manner. Weoutline below some of the common themes in the objectives and priorities inthe Indian development programmes.

3. Raising the Standard of Living: Trends in Income, Consumptionand Social Indicators(a) Income Trends

National income or similar notions of economic value of all goodsand services produced in an economy have often been measures of thetotal resources available to a country in any given period of time. It is alsoa measure of welfare in that it is indicative of the purchasing power of thepopulation of a country as a whole with which the economic needs can bemet. While the limitations of the concepts such as gross domestic product(GDP) as measures of welfare were recognised in all the policy statements,it is often used as a specific target for FYPs. The First FYP notes thatGDP is a measure of the performance of the economy as a “productivemachine”. The concept has now been broadened to include other dimensionsof development, in the form of ‘Human Development Index’ in its differentvariants.

Based on the Gross Domestic Product as a measure of performanceof the economy, India’s performance was rather slow until the end of 1970s.


The economy saw an acceleration of growth in the 1980s which was sustainedin the following decade. The rising levels of real per capita income havebeen illustrated in Figure 1. The emphasis on raising the level of GDP orlevel of economic activity, in the early years of economic planning can beunderstood in the context of the low level of GDP per capita at the time ofIndependence. As shown in Figure 1, the per capita GDP at the end of IFYP in 1955-56 was only US $ 58. As we show later in this monograph,incidence of poverty in the 1950s exceeded 50 per cent in some years.

The pace of economic growth can be gauged from the rates ofgrowth real GDP and per capita real GDP presented in Table 2. The GDPin constant prices was registering a slow growth of well below 5 per centper year, the usual target for the FYPs then, up to the V FYP. In all thesubsequent four FYPs, the rate of growth exceeded this 5 per cent mark.Measured in terms of per capita GDP, the average income rose at an annualgrowth rate of less than 2 per cent in three of the first four FYPs. Thegrowth accelerated to more than 4.5 per cent per year in the VIII FYP butdropped to 3.5 per cent in the IX FYP. India’s performance in economicgrowth did not compare favourably with the high performance of China andthe South East Asian economies, especially in the 1970s and 1980s. However,in comparison to her own past performance India’s overall real GDP growthhas improved in the 1980s and 1990s. Even across the countries, India’seconomic growth performance in the 1980s and 1990s has been impressive(World Bank 2002).

The rise in GDP is also marked by rising contributions from non-agricultural sectors of the economy. The changing structure of economicoutput over the years is illustrated in Figure 2. The pattern of developmentall over the world generally followed the transition from agricultural toindustrial and tertiary sectors. Indian economy is witnessing a swiftermovement to the tertiary sector with the services registering faster rate ofgrowth than the other sectors, particularly in the 1990s. The tertiary sectortoday accounts for more than 50 per cent of India’s GDP, almost as muchas China’s which has a much higher level of per capita GDP than India.Increasing globalisation of markets and dynamic shifts in comparativeadvantage in production and trade have an influence on the structure of theeconomy. In the Indian context, disadvantages of relatively underdevelopedinfrastructure may be hindering the growth of manufacturing sector leadingto faster growth of services. The growth of services sector has alsowitnessed rise in the informal sectors in the services. Thus, the transitionfrom primary to tertiary sector economy has not been an entirely positiveoutcome.


Tab

le 1

. Obj

ecti

ves

Ref

lect

ing

the

Pri

orit

ies

in I

ndia

’s F

ive-

Yea

r P

lans

Sl.

Are

as o

fT

he S

peci

fic

obje

ctiv

es

No.

Con

cern

I FY

PII

FY

PII

I F

YP

IV F

YP

V F

YP

VI F

YP

VII

FY

PV

III F

YP

IX F

YP

X F

YP

(195

1–52

to

(195

6–57

to

(196

1–62

to

(196

9–70

to

(197

4–75

to

(198

0–81

to

(198

5–86

to

(199

2–93

to

(199

7–98

to

(200

2–03

to

1955

–56)

1960

–61)

1965

–66)

1973

–74)

1977

–78)

1984

–85)

1989

–90)

1996

–97

2001

–02)

2006

–07)

1E

cono

mic

gro

wth

/T

arge

t of 2

.2T

arge

t of

Pri

ce s

tabi

li-

Lon

g te

rmA

ccel

erat

edS

elf-

sust

ain-

Acc

eler

ated

8 pe

r ce

nt a

nnua

l

mac

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onom

icpe

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ntan

nual

sati

on; r

aise

pers

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ive

grow

thin

g gr

owth

grow

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owth

of

GD

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he5

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Sl.

Are

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peci

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obje

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No.

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I F

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IV F

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VI F

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VII

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Figure 1. Per Capita GDP at Market Prices (US $): End of Each

FYP Period

Note: To focus attention on the experience of the economy through different five year plans,we have provided information corresponding to different FYPs. However, to provide anoverall perspective, data relating to periods of different decades is also presented. Thispattern is adopted in all the tables and figures in the paper.Source: RBI (2001)

(b) Consumption TrendsPer capita income represents purchasing power. Improvement in

incomes is expected to influence the pattern of consumption as well. Higheraverage household incomes have led to rise in per capita consumption ofgoods and services over time. As shown in Figure 3, level of per capitaconsumption expenditures of the households has increased over time, witha rising pace witnessed from VI FYP onwards. Coinciding with accelerationin per capita income, the average level of consumption has also increased ata faster pace. The pattern of consumption has also shifted in favour of non-food items over time and in favour of consumer durables within the non-food items (Table 3).

58 8

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40

9

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4

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150

2 0 0

250

3 0 0

350

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450

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$


Table 2. Trends in GDP, Population and Per Capita GDP

FiveYear Period Per Capita GDP(MP) Annual Growth Rates (%)

Plan Rs (current US $ Population GDP(FC) Per capita GDP prices) (constant (constant prices)

prices

I 1951-56 277 58 1.83 3.61 1.75II 1956-61 396 83 2.00 4.27 2.22III 1961-66 570 120 2.25 2.84 0.58IV 1969-74 1,131 144 2.29 3.35 1.05V 1974-78 1,602 187 2.25 4.72 2.41VI 1980-85 3,322 279 2.16 5.64 3.40VII 1985-90 5,915 355 2.15 5.96 3.73VIII 1992-97 14,509 409 1.95 6.69 4.65IX 1997-2002 22,141 464 1.92 5.72 3.48

1950s 307 64 1.92 3.59 1.641960s 576 101 2.19 3.96 1.731970s 1,357 165 2.30 2.94 0.631980s 3,694 307 2.16 5.80 3.561990s 12,477 375 1.89 5.80 3.84

Note: Per capita GDP in US $ has been estimated using the average exchange rate for the year;MP = market prices; FC= factor cost.Source: RBI (2001)

Figure 2. Changing Structure of the Economy: Share of Sectors inGDP at 1993-94 Prices

Source: EPW (2002)

0

10

2 0

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4 0

5 0

6 0

7 0

8 0

9 0

100

Plan Periods

Pe

r C

en

t

Industry (mining &Q +mfg+egw+constr) Agriculture & all ied Services


Within the food items, there is a shift from basic foods such ascereals and pulses to protective foods such as fruits and vegetables, milk,meat, fish and eggs. There is actually a decline in the consumptionexpenditure on cereals and pulses in the IX FYP period. During this periodoutput of foodgrains was erratic. In 1997-98 it fell by 4.3 per cent and in2000-01 the decline was about 6.5 per cent.

Although not all the decline in output is translated into consumptiondecline, the impact is significant. The share of processed foods such asedible oils and sugar has also increased over time. On an average, there ishigher consumption of goods and services on per capita basis today thanbefore and there is greater diversification of the consumption basket. Therising income has meant opening up of a large market for consumer goodsin the country.

Figure 3. Trends in Per Capita Consumption Expenditure at 1993-94 Prices (Rs)

Source: RBI (2001) and EPW (2002)

(c) The Social IndicatorsThe average levels of income and consumption expenditures do not

fully reflect the other dimensions of development of the economy. Althoughincome provides households and individuals with purchasing power, the‘standard of living’ need not necessarily vary in the same fashion as theincome variable. The Human Development Index (HDI), pioneered by the

0

1000

2000

3000

4000

5000

6000

7000

8000

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I

19

51

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II

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56

-61

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96

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1*

Plan Periods

Ru

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es

0

50

100

150

200

250

300

350

400

450

500

US

$

Food Durables Non-Durables Per Capita GDP US $


UNDP draws attention to variables relating to educational and healthattainment indicators. As the HDI is available only for the period starting inearly 1990s, we do not provide this estimate at this point. In Table 4, wepresent the improvements in selected indicators relating to education andhealth in India over the past decades.

There has been a slow rise in the proportion of the population whopossess basic ‘literacy’. The level of literacy has always been higher forthe males than the females although the gap is now narrowing.

Table 3. Changing Pattern of Consumer ExpenditureAnnual Average Growth Rate ( %) of PFCE at 1993-94 prices

FiveYear Period Food Cereals & Other Non-Food Durables Non- TotalPlan Pulses Food Durables

I 1951-56 3.41 4.73 2.61 3.46 3.66 3.46 4.13II 1956-61 3.98 4.58 3.75 3.09 7.21 2.98 3.69III 1961-66 1.84 0.01 3.13 3.86 7.68 3.74 2.35IV 1969-74 1.85 0.89 2.49 3.13 8.14 2.90 2.44V 1974-78 4.42 4.46 4.55 4.09 6.01 3.99 4.37VI 1980-85 4.96 5.79 4.72 5.43 6.74 5.37 5.00VII 1985-90 3.32 3.39 3.42 5.61 5.85 5.61 4.39VIII 1992-97 4.42 2.79 5.23 5.92 6.22 5.91 5.14IX 1997-01* 0.75 -4.44 2.82 9.99 8.65 7.44 4.17

1950s 3.42 4.39 2.93 3.22 5.15 3.17 3.711960s 3.34 3.04 3.63 3.34 8.20 3.17 3.181970s 2.18 0.42 3.33 3.82 5.49 3.74 2.811980s 4.14 4.59 4.07 5.52 6.29 5.49 4.701990s 3.90 1.94 4.77 5.24 5.05 6.05 4.68

Note: * data available only up to 2000-01Source: EPW (2002)

The proportion of literate population is also higher in the urban areasthan in the rural areas. The ‘enrolment ratios’ in schools have increasedover time for children in the age group of 5-10 years where basic primaryeducation is imparted. The current levels of close to 100 per cent areencouraging with reference to the goal of universal primary education. TheX FYP that was launched in 2002 aims at achieving a literacy rate of 75 percent by 2007 from the current levels of about 65 per cent.

There has been an improvement in health status in terms of lowerinfant mortality rates (from 115 per thousand in 1961 to 71 per thousand in2001) and higher life expectancy at birth (from 32.1 years in 1950-51 toover 60 years in 2000-01). Death rate per thousand has fallen from 27.4 in1950-51 to 8.5 in 2000-01, the birth rate from 39.9 to 25.8 during the sameperiod.


Tab

le 4

. Im

prov

ing

Hea

lth

and

Edu

cati

on

Yea

rH

ealt

h In

dica

tors

Edu

cati

on I

ndic

ator

s (%

)E

nrol

men

t Rat

ios

(%)

IMR

Per

Dea

th R

ate

Lif

e E

xpec

tanc

y Y

ears

Mal

eFe

mal

eT

otal

Prim

ary

Edu

catio

n

’0

00

per

’000

M

ale

Fem

ale

All

Lite

racy

Lite

racy

B

oys

Girl

sT

otal

1951

146

27.4

41.9

40.6

41.3

27.2

8.9

18.3

NA

NA

NA

1961

115

22.8

47.1

45.6

46.4

40.4

15.4

28.3

NA

NA

NA

1971

129

14.9

50.5

49.0

49.7

46.0

22.0

34.5

95.5

60.5

78.6

1981

110

12.5

55.4

55.7

55.4

54.4

30.0

43.6

95.8

64.1

80.5

1991

809.

859

.760

.760

.364

.139

.352

.211

4.0

85.5

100.

120

0168

8.5

63.9

66.9

65.3

75.9

54.2

65.4

104.

985

.995

.7G

oals

of X

Pla

n20

0745

NA

NA

NA

NA

NA

NA

75.0

100.

010

0.0

100.

020

1228

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

Sour

ce: G

over

nmen

t of I

ndia

(200

3) a

nd G

over

nmen

t of I

ndia

(200

0a).


India has built up a large health infrastructure and manpower ingovernment, voluntary and private sectors. Both technological advancesand better access to health facilities have resulted in improved health statusof the population. Table 5 has a summary of selected health indicators whichpoint to progress in the development of health care infrastructure andreduction in some of the dreaded diseases.

The improvement in health status as reflected in a variety of indicatorsis substantial. However, the current levels of health indicators are still belowthe levels seen in developed economies and in several of the developingeconomies. India has a ranking of Human Development Index (HDI) farbelow that of a country of similar size in terms of population such as China,indicating the gap in development for India (Table 6).

Table 5. Health Infrastructure, Decline in the Threat of MajorDiseases

Particulars 1951 1981 1991 Approx. in 2001

No. of hospitals 2,694 6,804 11,174 43,322No. of dispensaries 6,515 16751 27,431PHCs 725 57,363 NA 163,181Beds per ’000population 32 83 65 NADoctors per ‘000population 0.17 0.39 0.47 0.56Incidence of dreadeddiseasesDiseases 1951 1981 2000 Goal of Eradi-

cation by YearMalaria (million cases) 75 2.7 2.2 NALeprosy (cases per10,000 population) 38.1 57.3 3.7 2005Small Pox (No.of cases) >44,000 Eradicated NA NAPolio (No.of cases) NA >29.79 26.5 2005

Source: Government of India (2003) and Government of India (2000a)

4. Regional Dimension of DevelopmentGiven the large geographical size of the nation with varied resource

endowments and different patterns of production depending on historicalpatterns of investments in industry, infrastructure, agriculture, and marketsacross the country, the development experience has also varied over timeacross the country. The average levels of per capita state domestic product(similar to the measures of GDP at the national level, subject to a number of


Table 6. India’s Ranking in HDI

Country HDI Rank in HDI in Per Capita GNP US $

1992 2000 1992 2000 1992 2000

Norway 5 1 0.932 0.942 26280 33650Australia 7 5 0.927 0.939 17730 20530Sri Lanka 90 89 0.704 0.741 540 870China 94 96 0.594 0.726 470 840Indonesia 105 110 0.637 0.684 670 570India 135 124 0.439 0.577 310 460Pakistan 132 138 0.483 0.499 420 470Nepal 149 142 0.343 0.49 170 220Bangladesh 146 145 0.364 0.478 220 380Mozambique 159 170 0.246 0.322 60 210Ethiopia 161 168 0.227 0.327 110 100Niger 169 172 0.207 0.277 280 80

Source: Government of India (2003); UNDP (1994 and 1995); World Bank (2002)

caveats) have varied at different rates over time (Table 7). Taking theperiod since 1980-81 for which relatively better data are available, the averageannual rate of growth of GSDP (in real terms) has shown significant variationacross the states. In terms of average levels of GSDP, among the majorstates, Delhi had the highest per capita GSDP in 1980-81, which was 4times the level for Bihar, with the lowest per capita GSDP. Goa had thesecond highest per capita GSDP in 2001-01 and Bihar the lowest. But, now,Delhi’s per capita GSDP is about six times Bihar’s.

A look at the pattern of projected growth in the X Plan and levels ofper capita GSDP in 1999-00 shown in Figure 4 indicates that variability inthe levels of per capita GSDP will continue to persist given the potential forhigher growth in the more developed regions in the immediate future.

The regional variations in terms of their indicators of developmentsuch as education and health are also wide (Table 8).

Literacy rate is the highest in Kerala at 90.92 per cent in 2001while it is the lowest in Bihar at 47.53 per cent. In 1951, it was the highestin Kerala at 40.7 per cent and the least in Rajasthan at 8.95. The infantmortality rate is the lowest in Kerala at 16 per thousand live births in 2001and the highest in Orissa at 98 per thousand. In 1961, the infant mortalityratewas the least again in Kerala at 52 per thousand and the highest in MadhyaPradesh at 150 per thousand.


Table 7. Per Capita Income (GSDP) and Growth Rate of PerCapita GSDP for Selected States

Sl. States (in Ascending Growth Rates of

No Order of Per Capita Per Capita GSDP (Nominal) Real Per Capita

GSDP in 1999-00) GSDP Per Cent

Per Year

Rs.1980-81 Rs 1999-00 US$1980-811999-00 Avg. VIII- X FYP

(US$) IX FYP

1 Bihar 1,022 5,893 129.2 136.0 3.1 6.2

2 Orissa 1,352 8,733 170.9 201.5 3.6 6.2

3 Uttar Pradesh* 1,319 9,323 166.8 215.2 4.5 7.6

4 Assam 1,329 9,720 168.0 224.3 2.5 6.2

5 Madhya Pradesh 1,609 11,313 203.4 261.1 5.2 7.0

6 Meghalaya 1,538 12,083 194.4 278.9 5.0 6.3

7 Jammu & Kashmir 2,152 12,373 272.1 285.6 5.1 6.3

8 Nagaland 1,607 12,594 203.2 290.7 5.8 5.6

9 Manipur 1,396 12,721 176.5 293.6 5.5 6.5

10 Rajasthan 1,424 13,046 180.0 301.1 5.5 8.3

11 Tripura 1,645 13,195 208.0 304.5 7.0 7.3

12 Arunachal Pradesh 1,522 13,352 192.4 308.1 4.8 8.0

13 Sikkim 1,545 14,751 195.3 340.4 6.8 7.9

14 Andhra Pradesh 1,467 14,878 185.5 343.4 5.0 6.8

15 West Bengal 1,925 14,894 243.4 343.7 6.6 8.8

16 Karnataka 1,644 16,654 207.8 384.4 6.7 10.1

17 Kerala 1,835 17,709 232.0 408.7 6.1 6.5

18 Himachal Pradesh 1,820 17,786 230.1 410.5 6.2 8.9

19 Tamil Nadu 1,666 18,623 210.6 429.8 6.7 8.0

20 Gujarat 2,089 18,685 264.1 431.2 8.2 10.2

21 Haryana 2,437 21,551 308.1 497.4 4.7 7.9

22 Maharashtra 2,492 22604 315.0 521.7 6.8 7.4

23 Punjab 2,629 23,254 332.4 536.7 4.6 6.4

24 Pondicherry 3,201 29,348 404.7 677.3 10.1 10.7

25 Delhi 4,145 36,515 524.0 842.7 6.9 10.6

26 Goa 3,200 44,613 404.6 1,029.6 7.2 9.2

Notes: * Estimated excluding UttaranchalSource: Government of India (2003); Planning Commission (2003)


Figure 4. Per Capita Income (1999-2000) and Projected Growth inX Plan: Major States

Source: Government of India (2003) and Planning Commission (2003)

Life expectancy at birth is the highest at 75 years in Kerala andthe least in Madhya Pradesh at 58.01 years for the period 2001-06.

The large variations in the performance of the state economies arealso captured in the Human Development Index computed by the PlanningCommission (Table 9). For the 15 major states that we have consideredhere, Kerala has the top rank in all the three years of 1981, 1991 and 2001.Bihar has the lowest position in the rankings.

5. Poverty ReductionIn all the FYPs starting from the first, reduction in poverty has been

a major explicit or implicit objective of government’s economic policy. Interms of a simplistic measure of poverty, the ‘head count ratio’, the successof policies in reducing poverty was marginal until the 1970s. Although thereare problems in comparison, the incidence of rural poverty between 1956-57 and 1973-74 showed no declining trend until 1969-70 but then declined inthe next two years. In the subsequent period, however, there has been areduction in poverty over the years. From a level of 54.9 per cent in 1973-74 for rural and urban population combined, the incidence of poverty declinedto 36 per cent in 1993-94 and an estimated 26.1 per cent in1999-2000. TheX Five-Year Plan has targeted a ratio of 19 per cent by the end of plan

0

200

400

600

800

1000

1200

US $

0

2

4

6

8

10

12

Per

Cen

t

1999-00(US$) Xth FYP


Table 8. Selected Indicators of Human Development AcrossStates

Sl . State Life Expectancy Infant Mortality Rate Birth Rate Death Rate Literacy Rates

No. at Birth in Years Per Thousand Live Per 1000 Per 1000 Per Cent 2001

(2001–06) Births (2000) (2000) (2000)

Male Female Male Female Total

1 AP 63 65 66 64 65 21 8 61.11

2 Assam 59 61 66 83 75 27 10 64.28

3 Bihar 66 65 62 61 62 32 9 47.53

4 Gujarat 63 64 59 67 62 25 8 69.97

5 Haryana 65 69 63 71 67 27 8 68.59

6 Karnataka 62 66 65 47 57 22 8 67.04

7 Kerala 72 75 15 13 14 18 6 90.92

8 MP 59 58 81 93 87 31 10 64.11

9 Maharashtra 67 70 46 50 48 21 8 77.27

10 Orissa 60 60 98 92 96 24 11 63.31

11 Punjab 70 72 45 62 52 22 7 69.95

12 Rajasthan 62 63 76 81 79 31 9 61.03

13 Tamil Nadu 67 70 49 54 51 19 8 73.47

14 Uttar Pradesh 64 64 81 87 83 33 10 57.36

15 West Bengal 66 69 54 47 51 21 7 69.22

India 64 67 67 69 68 26 9 65.38

Maximum in Kerala Kearala OrissaOrissa Orissa UP Orissa Kerala

Minimum in MP & MP KeralaKerala Kerala Kerala Kerala Bihar

Assam

Source: Government of India (2003).

period, 2006-07. The trends in incidence of poverty at the national level areillustrated in Figure 5.

While the reduction in incidence of poverty by 50 per cent of theinitial ratio between 1973-74 and 1999-2000 was significant, the level ofincidence is still high. The number of poor in 1999-2000 were an estimated260.3 million with 74 per cent of them residing in rural areas. Using thenorm of US$ 1 per day, nearly 25 per cent of world’s poor were in India.The persistence of high levels of poverty at the aggregate level is also apointer to the high levels of chronic poverty, an issue that is only beginningto receive some attention now (Mehta and Shah 2003).


Table 9. Human Development Index 1981, 1991 and 2001(Arranged in Rank Order of 1991)

Sl. No. States/UTs 1981 1991 2001

Value Rank Value Rank Value Rank

1 Kerala 0.500 1 0.591 1 0.638 12 Punjab 0.411 2 0.475 2 0.537 23 Tamil Nadu 0.343 7 0.466 3 0.531 34 Maharashtra 0.363 3 0.452 4 0.523 45 Haryana 0.360 5 0.443 5 0.509 56 Gujarat 0.360 4 0.431 6 0.479 67 Karnataka 0.346 6 0.412 7 0.478 78 West Bengal 0.305 8 0.404 8 0.472 89 Andhra Pradesh 0.298 9 0.377 9 0.416 1010 Assam 0.272 10 0.348 10 0.386 1411 Rajasthan 0.256 12 0.347 11 0.424 912 Orissa 0.267 11 0.345 12 0.404 1113 Madhya Pradesh 0.245 14 0.328 13 0.394 1214 Uttar Pradesh 0.255 13 0.314 14 0.388 1315 Bihar 0.237 15 0.308 15 0.367 15

All India 0.302 0.381 0.472

Note: We have reported the HDI and corresponding rank for only those states for which HDIwas estimated in 2001Source: Government of India (2003)

In 1973-74, about 80 per cent of the nation’s poor were in ruralareas. Thus, there was a reduction in the incidence of poverty slightlyfaster in rural areas than in the urban areas. In fact, in absolute terms, therewere larger numbers of poor people in the urban areas in 1999-00 than in1973-74, whereas the number of poor in the rural areas declined in 1999-00relative to the number in 1973-74. One of the factors swelling the ranks ofurban poor is the attraction of the urban areas to rural poor as a source ofemployment. The trends suggest that attention is needed on measures toreduce poverty in urban areas as well as in the rural areas.


Figure 5. Trends in Poverty: The Head Count Ratio

Source: World Bank (2000) and extended data from Government of India (2003)

There is also a regional dimension to poverty. The states with lowper capita GSDP are also those where incidence of poverty is greater (Table10). The states of Uttar Pradesh, Madhya Pradesh, Orissa and Bihar areamong the states where per capita GSDP is the lowest. It is also in thesestates that the incidence of poverty is the highest. However, poverty hasdeclined in all the states.

The causes of poverty lie in low productivity of labour in sectorswhere the poor make their livelihoods. Lack of opportunities to improvetheir own labour assets reduces the chances of moving up the occupation orincome ladder. The anti-poverty programmes have focussed on a varietyof approaches.

(a) Rural Poverty Alleviation ProgrammesPoverty issue was essentially a rural problem in the initial years of

development planning given the immense proportion of poor in the ruralareas. In this context, initial strategies to address poverty focussed onagricultural development, one of the major effects of which were thought tobe poverty reduction. Strategies for raising productivity of small and marginalfarmers kept in view the concentration of poor in these occupation groupsbesides the landless labour. The role of poor agro-climatic conditions ininfluencing poverty was also a factor in policies relating to poverty alleviation.

0

10

20

30

40

50

60

70

Per

Cen

t

Rural Urban Total


Tab

le 1

0. S

tate

Lev

el I

ncid

ence

of

Pov

erty

(P

er C

ent

of P

opul

atio

n)

Sta

teR

ural

Urb

anT

otal

199

3-94

1999

-00

Proj

ecte

d19

93-9

419

99-0

0Pr

ojec

ted

1993

-94

1999

-00

Proj

ecte

d20

06–0

720

06–0

720

06–0

7

And

hra

Pra

desh

15.9

11.1

4.6

38.3

26.6

19.0

22.2

15.8

8.5

Ass

am45

.040

.037

.97.

77.

54.

540

.936

.133

.3B

ihar

58.2

44.3

44.8

34.5

32.9

32.7

55.0

42.6

43.2

Guj

arat

22.2

13.2

2.0

27.9

15.6

2.0

24.2

14.1

2.0

Har

yana

28.0

8.3

2.0

16.4

10.0

2.0

25.1

8.7

2.0

Him

acha

l Pra

desh

30.3

7.9

2.0

9.2

4.6

2.0

28.4

7.6

2.0

Jam

mu

& K

ashm

ir30

.34.

0N

A9.

22.

0N

A25

.23.

5N

AK

arna

taka

29.9

17.4

7.8

40.1

25.3

8.0

33.2

20.0

7.9

Ker

ala

25.8

9.4

1.6

24.6

20.3

9.3

25.4

12.7

3.6

Mad

hya

Pra

desh

40.6

37.1

28.7

48.4

38.4

31.8

42.5

37.4

29.5

Mah

aras

htra

37.9

23.7

17.0

35.2

26.8

15.2

36.9

25.0

16.2

Ori

ssa

49.7

48.0

41.7

41.6

42.8

37.5

48.6

47.2

41.0

Pun

jab

12.0

6.4

2.0

11.4

5.8

2.0

11.8

6.2

2.0

Raj

asth

an26

.513

.711

.130

.519

.915

.427

.415

.312

.1T

amil

Nad

u32

.520

.63.

739

.822

.19.

635

.021

.16.

6U

ttar

Pra

desh

42.3

31.2

24.3

35.4

30.6

26.2

40.9

31.2

24.7

Wes

t Ben

gal

40.8

31.9

22.0

22.4

14.9

9.0

35.7

27.0

18.3

Indi

a37

.327

.121

.132

.423

.615

.036

.026

.119

.3

Sour

ce: P

lann

ing

Com

mis

sion

(200

3).


The IV Five Year Plan which began after the drought experienceof the mid-1960s, launched the programmes called, Small Farmers’Development Agency (SFDA) Programme, Programme for MarginalFarmers and Agricultural Labourers (MFAL) and Drought Prone AreaProgramme (DPAP). The two programmes of SFDA and MFAL weremerged into a single SFDA programme in the V Five Year Plan. TheSFDA was later merged with another major anti-poverty programme called,‘Integrated Rural Development Programme’ (IRDP) in 1979.

Besides agricultural development, anti-poverty programmes beganto focus on providing employment to the poor in rural areas. Starting insmall measures in 1970-71, the programmes assumed significant scale bythe V Five Year Plan. A Food for Work programme was launched in 1977.Removal of poverty over a reasonable period of time was a policy stance inthe V Five Year Plan. The Minimum Needs Programme (MNP) whichalso began in 1974 (V Plan) reflected the approach to poverty reduction asone of not merely addressing food requirement of the poor but also otherservices such as health, education, drinking water, roads etc.

The employment generation programmes made a favourable impactby providing jobs to the poor in the ‘lean agricultural season’ in rural areas.The VI Five Year Plan included more intensified efforts at poverty reduction.The IRDP was launched in 1976. This programme aimed at evolving anintegrated strategy for agricultural development and poverty reduction. Thebeneficiaries of the programme were the poor farmers, labourers and artisans.The programme came to reflect two main approaches. One was to assistin the generation of self-employment and the other, employment generation.A new National Rural Employment Programme (NREP) launched in 1980aimed at generating 300-400 million man-days of employment per year inworks creating durable community assets in rural areas. Food grainsprocured by the government under price support programmes for the farmerswere used to part-pay the wages under the programme.

Efforts at targeting vulnerable groups for providing support continuedto expand with a new scheme called, ‘Development of Women and Childrenin Rural Areas’ (DWCRA) launched in 1982. The programme, which stillcontinues aims at facilitating access of poor women to employment, skillupgradation and other support, services. It encourages collective or groupaction among the poor. The programme also aims at supporting otherservices such as health, family welfare, child care and shelter for the poor.To give an idea of the coverage, by 1996-97, about 188,000 DWCRA groupshad been formed covering 3 million rural women.


In 1989, the NREP and the Rural Landless Employment GuaranteeProgramme (RLEGP), which had begun in 1983, were merged into a singlerural wage employment programme called Jawahar Rozgar Yojana (JRY).The programme envisaged creating 931 million man-days of employmentper year. The works supported by the employment programme were tocreate rural infrastructure. The programme came to be implemented inevery village in the country and had specific components for creating housingfor the poor and providing open wells for them for irrigation purposes. JRYhas now been revamped to focus on creating rural infrastructure. The‘Employment Assurance Scheme (EAS) became the main employmentprogramme in rural areas. While the programme is not targetting poor alone,its operation effectively provides jobs for the poor. It provides 100 days ofassured casual manual employment during the lean agricultural season atstatutory minimum wages to all persons of age between 18 and 60 years.

The official policies have also attempted to assist the poor in avariety of other ways: The National Social Assistance Programme (NSAP)which was launched in 1995 aims to provide assistance to poor householdsin the case of old age, death of primary breadwinner and maternity. This isnot a poverty alleviation scheme but meets some of the critical needs ofvulnerable sections of the society.

On the basis of long experience with the poverty alleviationprogrammes, there has been a further streamlining of the efforts in the late1990s. In 1999, the Swarnajayanti Gram Swarozgar Yojana (SGSY) waslaunched as the self-employment programme for the poor. The programmeis based on the self-help groups (SHG) of the poor. The employmentprogrammes were brought under the umbrella of Sampoorna Gramin RozgarYojana (SGRY) in 2001. The main strategy of poverty alleviation today isto provide self-employment and wage employment opportunities.Employment is provided through a variety of rural development programmes,which build community assets.

(a) Urban Poverty Alleviation ProgrammesWhile provision for basic physical facilities in the urban slums was

attempted even in the late 1950s, a programme specifically meant to provideemployment to the urban poor began only in 1989. The Nehru RozgarYojana (NRY) was aimed at providing wage employment and self-employment for urban poor (this latter component was called “Scheme forUrban Micro Enterprises”). An integrated programme of SwarnajayantiShahari Rozgar Yojana (SJSRY) was launched in 1997 streamlining variousearlier efforts of employment generation and development of slums in urban


areas and it included self-employment and wage employment components.The programme aimed at group action and community involvement in theimplementation of the programmes. We provide an overview of the variouspoverty alleviation programmes in Table 11.

6. Inequality of ConsumptionIn the various FYPs, the objective of reduction in inequality in the

distribution of income and wealth has been re-iterated. But, there are noregular sources of data on income to indicate the trends in income inequalityor inequality in the distribution of wealth. We noted earlier the continuedand significant regional variations in the average levels of income as reflectedin the state level output (GSDP per capita). The only periodic surveys ofhouseholds relating to their economic status are the surveys of householdconsumption conducted by National Sample Survey Organisation.Distribution of consumption may by nature be more equitable than distributionof income. In a broad sense, trends in the distribution of households byconsumption expenditure are likely to be indicative of the trends in incomedistribution also.

The trend in estimated measure of expenditure distribution has beensummarised in Table 12 for the various years during the period since 1950s.The trends suggest a decline in the measures of inequality between 1953-54and 1999-2000 in both rural and urban areas. The inequality in rural areas islower than in urban areas. In fact, in the last two decades of 1980s and1990s, the rural areas show a decline in consumption inequality while in theurban areas the trend is one of increasing inequality. Clearly, inequality willremain a feature of the economy but policies must aim at providing adequateopportunities for growth to all.

7. EmploymentGeneration of employment opportunities for the growing labour force

is among the main objectives of development policy. This is consistent withthe objective of reducing poverty in the sense that poverty is the result ofunder-employment or low-productivity employment. Generation of moreproductive employment is also, therefore, an important aspect of policy. Anumber of government policies have an impact on employment. Althoughthe government has a number of programmes meant to generate employmentfor the poor, other policies relating to economic growth, labour marketregulation and the size of the public sector employment also affectemployment.


Table 11. Some Major Programmes Aimed at Providing Relief tothe Poor

Focus Programmes Approach

Rural Areas1. Agriculture related Small Farmers’ Development Credit and subsidy for

incomes of the poor. Agency (SFDA) and Marginal agricultural inputs; livestockFarmers and Agricultural enterprises to supplementLabour (MFAL) income; activities to benefit the

selected poor households. Theprogrammes assisted apopulation of about 12 million.

2. Access to basic Minimum Needs Programme Subsidised or free services inservices (1974-79); Basic Minimum elementary education; primary

Services (1979-96); Pradhan health care, electrification,Mantri Gramodaya Yojana roads, housing(2000-01 onwards)

3. Building community Rural Works Programme Creating community assetsassets and infrastruc- (1970-71); Food for work such as school buildings, roads,ture (1977-79); National Rural irrigation/ drainage works;

Employment Programme provide wage employment to(1981-89); Jawahar Gram poor and persons affected bySamrudhi Yojana (1999 natural calamities.onwards); Pradhan MantriGram Sadak Yojana(2000-01 onwards)

4. Self-employment Integrated Rural Develop- Credit and subsidy to the pooropportunities ment Programme (IRDP) households for improving

1978-79 to 1999-2000) agricultural productivity andincomes; the programme alsomoved away from individualbeneficiaries to group approachto poverty alleviation.

Training of Rural Youth for Provide opportunities toSelf-employment (TRYSEM) upgrade/ obtain traditional(1979 to 1999; now merged skills of poor youth and assistwith SGSY) in self-employment under IRDP.

4. Self-employment Development of Women and Improve living conditions ofopportunities Children in Rural Areas women and children through(continued) (DWCRA) (1983 to 1989) opportunities for self-

employment and provision ofbasic social services.

Supply of Improved Tool kit Rural artisans/craft personsto Rural Artisans (SITRA) supplied with improved hand(1992 to 1999; now merged tools with 10 per centwith SGSY) subsidySwarna Jayanti Gram Promotion of Self-HelpSwarogzar Yojana (SGSY) Groups for the poor; training(1999 to present) and capacity building

programmes; providingincome generating assets.


Focus Programmes Approach

5. Employment Rural Landless Employment Providing guarantee ofGuarantee Programme employment to at least one(RLEGP) (1983 to 1989) member of a landlessJawahar Rozgar Yojana (JRY) household for up to 90 days(1989 to 1999) in a year in works developing

infrastructure.Employment Assurance Providing manual work in theScheme (EAS) (1993 to lean agricultural season atpresent) statutory minimum wage rate

(similar in nature to RLEGPabove)

Sampoorna Gramin Rozgar This integrates JRY and EASYojana (SGRY) (2001 onwards)

6. Social Assistance to National Social Assistance Financial assistance to thethe Poor Programme (NSAP) (1995 poor in the case of old age,

onwards) death of primary breadwinnerand maternity

The Antyodaya Anna Yojana Providing foodgrains at(2001 to present) significantly subsidised rate

to the poor.The Annapurna Scheme Financial assistance to senior(2000 onwards) citizens

Urban Areas7. Employment Nehru Rozgar Yojana Employment to urban

(1989-1997) unemployed and under-employed through wageemployment and assistance tosetting up micro enterprises.

Prime Minister’s Integrated Wage employment for the poorUrban Poverty EradicationProgramme (PMIUPEP)(1995-97)

8. Community Assets National Slum Development Providing physical and socialand Basic Social Programme (1996-97 onwards) amenities in the slum areas.Services

Urban Basic Services for the Focusing on communityPoor (1992-97) organisation, mobilisation and

employment to provide basicservices.

9. Self-employment Swarna Jayanti Shehar Rozgar Assistance to the poor in settingYojana (1997 onwards) up gainful self-employment

10. Housing Valmiki Ambedkar Awas Yojana Shelter for the poor(2000-01 onwards)

Note: This summary is based on various FYP documents.


Table 12. Trends in Consumption Inequality

Lorenz Ratio of Consumption Expenditure Distribution

Year Rural Urban

1953-54 0.334 0.3811954-55 0.350 0.3901955-56 0.344 0.3681956-57 0.332 0.3941957-58 0.334 0.3591958-59 0.340 0.3481959-60 0.314 0.3571960-61 0.321 0.3481961-62 0.313 0.3571963-64 0.297 0.3601964-65 0.294 0.3491965-66 0.297 0.3391966-67 0.293 0.3371967-68 0.291 0.3321968-69 0.305 0.3291969-70 0.293 0.3401970-71 0.283 0.3271973-74 0.299 0.3411974-75 0.276 0.3011977-78 0.336 0.3441983-84 0.297 0.3251987-88 0.298 0.3541993-94 0.282 0.3391999-2000 0.258 0.341

Source: Kapila (1999); Planning Commission (2001)

At the sectoral level, agriculture has been the largest employer oflabour force in the country. In 1961, about 71 per cent of the workforcewas engaged in agriculture as cultivators and labourers. There has been agradual decline in the share of agriculture in total employment over theyears (Figure 6). The decline in the share of agriculture in total employmentfrom 71 per cent in 1961 to 56 per cent in 2001 is offset by a rise in theshare of services from 17 per cent in 1961 to 26 per cent in 2001. Theshare of industry rose from 12 per cent in 1961 to 18 per cent in 2001. ThePlanning Commission projects continuation of these trends into the X Planperiod. By 2006, the share of agriculture is expected to decrease to 51 percent whereas the shares of industry and services to rise to 20 per cent and29 per cent, respectively.


Figure 6. Trends in the Structure of Employment (Per Cent Shares)

Source: Government of India (2003); Planning Commission (2003)

The projected share of agriculture in total employment in 2006 is 51per cent if the targeted growth rates in the X FYP are achieved. The shareof services has been projected to go up to 29 per cent by 2006 from thecurrent levels of about 26 per cent. Some features of employment growthhave been presented in Tables 13 and 14.

Table 13. Estimated Workforce (Employment in Million)

Year (Beginning Organised Public Private Organised Unorganised Totalof period) Sector Sector

1961 12.1 7.0 5.0 176.6 188.71971 17.5 10.7 6.8 162.9 180.41981 22.9 15.5 7.4 221.7 244.61991 26.7 19.1 7.7 287.4 314.12001 27.8 19.1 8.7 352.9 380.7

Source: Government of India (2003).

A major dichotomy in the labour market in India is between‘organised’ and ‘unorganised’ sectors. The ‘organised sector’ has greaterprotection under labour laws and hence, workers employed here earn betterwages and generally, enjoy other benefits such as nominal wages that arelinked to overall inflation rate. However, only about 8 per cent of the totalworkforce in the country is in the ‘organised sector’ (Figure 7).

0%10%20%30%40%50%60%

70%80%90%

100%

1961 1971 1981 1991 2001 2006*

Agriculture Industry Services* Projected


Table 14. Growth of Population, Labour Force and Employment:Per Cent Per Year

Period Population Labour Force(Age group of Employment15-59 Years)

1961-1971 2.24 1.99 -0.451971-1981 2.24 1.83 3.091981-1991 2.15 1.90 2.531991-2001 1.95 3.79 1.942001-2006 1.63 1.80 2.70

Note: Projections for 2006 are based on X FYP (employment growth assumes policychanges and annual growth rate of 8 per cent in real GDP)Source: Government of India (2003); Planning Commission (2003); Registrar General (1991aand b)

Figure 7. Distribution of Employment (Per Cent Shares ofOrganised and Unorganised Sectors: 1999-2000)

Source: Government of India (2003)

Taking out agricultural employment, which is largely in theunorganised sector, the organised sector accounts for 20 per cent of thenon-agricultural labour force in the country today.

Public sector is the major component of the ‘organised’ sector.From a high of 72 per cent, the share of public sector in the organised sectoremployment has declined a little to 69 per cent in 2001. Although the role ofpublic sector in providing public goods to the society will increase in thefuture, its presence in other commercial activities is expected to decrease(Figure 8).

15.47 18.54

84.53 81.46

8.090.75

91.9199.25

0%

20%

40%

60%

80%

100%

Agriculture Industry Services All

Organised Unorganised


Figure 8. Share of Public Sector in Organised Sector Employment(Per Cent)


8. Sustainability of ProgressThe sustainability of economic growth and development has been

constantly emphasised in the planning process. Focus in the initial years ofplanning remained on issues such as raising the investment and saving ratesto sustain overall economic growth, achieving regional balance in growth toensure broad-based support for the development programmes, and attentionto the progress of socially and economically backward groups to ensure thesharing of fruits of development by many. However, concern towards theoptimal use of natural resources such as land, water and mineral resourcesremained high in the policy agenda. In the VI FYP, environmental concernsfound a place among the explicit objectives. Since then there has beengreater awareness in the policies on the need to preserve and improveenvironmental quality and not allow its degradation in the developmentprocess. To facilitate in discussion, we consider threats to sustainability ofdevelopment process and measures to deal with these vulnerabilities undertwo broad categories of economic vulnerabilities and vulnerabilities relatingto natural resources and environment.

(a) Economic VulnerabilitiesEconomic growth at a rapid pace was sought to be achieved with

the active policies of public investment. Financing public investment requiredcombinations of tax and borrowing measures. The need for highergovernment expenditure and the consequent resource mobilisation measuresbegan to affect adversely from time to time the macro-economic stability asreflected in periodic high inflation rates, large current account imbalances

0

10

20

30

40

50

60

70

80

1961 1966 1971 1976 1981 1986 1991 1996 2001

Per

Cen

t


and high levels of public debt. Although, inflation rates (CPI) of 5-10 percent have been normal in most of the years between 1950-51 and 2002-03,there were a number of years when inflation rate exceeded 10 per cent(Figure 9). Both consumer prices and wholesale prices display similar trendswith the WPI based inflation rate showing larger variations.

Figure 9. Trends in Inflation: Per Cent Change in Consumer PriceIndex for Industrial Workers (CPI(IW)) and Wholesale Price

Index (WPI)

Source: Chandhok (1990a) and updated from RBI (2001)

A characteristic of inflation rates in the period since 1980-81 is therelatively milder fluctuations. Although not at hyper-inflation levels, even aninflation rate of 10 per cent leads to severe strains on the economy. Rise infood prices and prices of essential commodities causes greater hardship tothe poor. A second barometer of the vulnerability of the economy to smallchanges in the economic environment is the level of current account deficit.A deficit is a common feature of the external account for India (Figure 10).Financing the current account deficit through external borrowing was alwaysa challenge for the Indian policy makers during the period when India waspursuing an import substitution policy. The rise in CAD to 3 per cent ofGDP in 1991 led to a crisis and the response was a major overhaul ofexternal trade and finance policies. There was a rapid improvement in theCAD relative to the pattern seen in the earlier episode following the crisisof the mid-1950s.

Clearly not all macro-economic instability was due to governmentspending or resource mobilisation policies. External events such as sharpoil price hikes, wars or shocks such as drought and floods also caused

- 1 0

- 5

0

5

1 0

1 5

2 0

2 5

3 0

19

61

-62

19

64

-65

19

67

-68

19

70

-71

19

73

-74

19

76

-77

19

79

-80

19

82

-83

19

85

-86

19

88

-89

19

91

-92

19

94

-95

19

97

-98

20

00

-01

Pe

r C

en

t

W P I CPI ( IW)


disruption of markets, scarcities of goods and high inflation. On the criticalissue of stability in the supplies of food, attention was given to raising thelevel of food grain production and building stock of grains with the governmentas a buffer against scarcities induced by droughts or such short-termadversities. The government stock of food grain has been used to supplygrain at a subsidised price to the consumers, increasingly by targeting thepoor households for these supplies.

Figure 10. Trends in Current Account Deficit (Per Cent of GDP)

Source: RBI (2001) and updated from Government of India (2003)

Figure 11. Food Grain Stock (End of March) as Per Cent of PDSOff-take of the Previous Year


-4

-3

-2

-1

0

1

2

19

50

-51

19

53

-54

19

56

-57

19

59

-60

19

62

-63

19

65

-66

19

68

-69

19

71

-72

19

74

-75

19

77

-78

19

80

-81

19

83

-84

19

86

-87

19

89

-90

19

92

-93

19

95

-96

19

98

-99

20

01

-02

0

5 0

1 0 0

1 5 0

2 0 0

2 5 0

3 0 0

Pe

r C

en

t


The government stocks of foodgrain are today at a record level ofabout 50 million tonnes which is almost three times the requirement of PDS(Figure 11). The supply of grain through the public distribution system isabout 15 million tonnes per year. Even in a year of severe drought in 2002-03, the foodgrain prices remained subdued in the market due to the largestock of grains with the government.

The balance of payments has always remained a critical concernfor the policy makers in sustaining the growth momentum. Exports laggedbehind imports, which supplied critical inputs such as petroleum crude andpetroleum products. The receipts from services exports including IT relatedservices have contributed to the strength of external accounts position. Themacro-economic crisis of 1991 was precipitated by the balance of paymentscrisis. In response, India launched a series of wide ranging programmes ofeconomic reforms of which trade liberalisation was a major part. Severalrestrictions on international trade were removed and foreign investmentregulations were liberalised. Exports received a push with the liberalisationof foreign exchange market and a devaluation that accompanied. Foreignexchange reserves began to rise with the foreign exchange receiptsregistering marked increases in the 1990s. The rise in foreign exchangereserves to comfortable levels is illustrated in Figure 12. The forex reservesby the end of 2003 had crossed $100 billion.

Figure 12. Foreign Exchange Reserves as Months of ImportCover: End of Each Plan Period

Source: RBI (2001)

11.8

1.3

2.5

8.4

4.0

1.6

5.1

2.1

8.0

0

2

4

6

8

1 0

1 2

1 4

Mo

nth

s


There has been a steady opening up of the Indian economy overthe years with the pace accelerating in the 1990s. As shown in Figure 13,merchandise trade as a proportion of total GDP has doubled in the 1990swhile the increase was less sharp in the previous period. The rise in totaltrade, goods plus services, has been even more imperative during the IXand X FYP periods. The liberalisation of trade policies has helped in thisexpansion which has been further strengthened by increasing globalisationtrend around the world.

A major cause of the macroeconomic crisis was the unsustainabilityof the government’s fiscal policies. The central government’s fiscal positionhad reached an unsustainable point with much of its borrowing necessitatedby debt servicing obligations. There was an urgent need to re-orient thefiscal position, reform revenue and expenditure policies. The fiscal positionof the government as a whole (centre plus states) continues to be a point ofconcern. The gross fiscal deficit of the central and state governmentsremained close to 10 per cent of GDP even in 2002-03 (Figure 14). This isgreater than the levels seen in 1990 which marked the onset of themacroeconomic crisis in 1991. The large deficits have made maintainingdevelopmental expenditure levels more difficult. The share of non-development expenditures which include items such as interest paymentson past loans has been rising (Figure 15).

Figure 13. Openness to Trade: Ratio of Trade to GDP (Per Cent)During FYPs


15.514.4

11.210.1

14.3

17.817.0

27.2

31.5

0

5

10

15

20

25

30

35

I 1951-

56

II 1956-

61

III 1961-

66

IV 1969-

74

V 1974-

78

VI 1980-

85

VII 1985-

90

VIII 1992-

97

IX 1997-

0 2

Pe

r C

en

t

Merchandise Trade Goods + Serv ices


The government has responded by focusing on areas where marketsare less likely to be adequate and allow market mechanisms to delivereconomic growth more efficiently. The VIII Five Year Plan noted thatmarket mechanism is inadequate for protecting environment, forests andecology and equally unable to give guidance about the use of scarce resourceslike rare minerals, land and water. The VIII FYP also points out that planningstill has a large role to play and that planning is needed for creating socialinfrastructure and for human development. Market mechanism may beable to bring equilibrium between demand (backed by purchasing power)and supply but it will not be able to balance the “need” and the “supply”.These roles assigned to the public sector require continued need for resourcesfor such investments. This need makes it imperative for the government tomaintain a level of fiscal balance that is sustainable.

(b) Vulnerabilities Relating to Natural Resources and Preservation ofEnvironment

In the context of the concerns relating to environment, the VI FYPpoints to a clear direction. The VI FYP, launched in 1980, for the first time,made environmental protection as one of the explicit objectives of a FiveYear Plan. One of the objectives of this five year plan was to bring aboutharmony between the short and the long-term goals of development byprotection and improvement of ecological and environmental assets.

Figure 14. Trends in Gross Fiscal Deficit as Percentage of GDPfor Centre and States

Source: NIPFP (2002); RBI (2001)

0

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Figure 15. Rising Non-Development Expenditure Shares (PerCent): Centre and State Governments

Source: Government of India (2002a)

The volatile prices of petroleum sector in the international marketswere also assuming importance at this time. The VI Five Year Plan alsoproposed speedy development of indigenous sources of energy, along withconservation and efficiency in energy use. In the VII FYP, which began in1985, greater attention was shown towards policies concerning the use ofnatural resources and the state of the environment. It argued for a judiciousblend of economic and environmental concerns to inform all developmentprogrammes in the future if development is to be sustainable over the long-run.

The VII Five Year Plan emphasised ‘optimal use’ of mineralresources, ocean resources, energy and forest resources rather than merelyfocussing on exploitation of these resources for more growth. It drewattention to the linkage between the state of environment and poverty innoting that the environment was under severe threat from the pressuregenerated by population growth, poverty and misuse/unplanned use of naturalresources. The need to incorporate environmental factors and ecologicalimperatives into the design of all developmental projects from the verycommencement of their plans was highlighted. The VIII FYP, re-iteratingthe importance of preserving environment, looked to decentralised approachto the problem as it required active participation by the people andprogrammes suited to local conditions. It pointed to the need for acceleratingthe cleaning of important rivers in the country.

The IX FYP proposed social mobilisation and participation of peopleat all levels to ensure environmental sustainability of development process.

42

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It endorsed the approach under the United Nations Conference onEnvironment and Development and sought a synergy between health,environment and development. The IX Plan laid stress on evolvingmethodologies for natural resource accounting to enable informed decisionson development programmes with respect to their impact on the wealth ofnatural resources in the country (Planning Commission, 2000). At thepractical level, the plan proposed correcting the under-pricing of naturalresources. To highlight the link between poverty and environmentaldegradation, the IX FYP proposed assured employment of 100 days in thelean agricultural season under the Employment Assurance Scheme (notedearlier under the poverty alleviation programmes) under which projects ofinfrastructure development would be taken up in the rural areas. The XFYP is more categorical in its assessment of inadequate attention toenvironment and ecology in the past development efforts. It recognises thethreat to nutritional security and health arising from the environmentaldegradation that has taken place. It warns about the dangers of rise ofpollution related disease burden unless remedial measures to check (urban)pollution are undertaken immediately.

Land ResourcesConcerns relating to the improvement of land resources have been

echoed in different policy statements over the years. Drawing attention tothe issues relating to pressure on land resources, the VII FYP noted thatabout 105 million hectares of cultivable lands and 8 million hectares of non-forests and non-agricultural lands are subject to widespread soil erosion. Inaddition, 43 million hectares of area was said to be degraded throughwaterlogging, salinity, alkalinity, ravines and shifting cultivation. The VIIFYP noted that an estimated 6 billion tonnes of topsoil are lost annuallythrough erosion and degradation, along with plant nutrients ranging between5.37 and 8.4 million tonnes. Arresting further degradation by proper landuse and soil conservation and bringing back to health the degraded soil tosupport a highly productive agriculture was stated to be the primary concernof development efforts. Till 1979-80, an area of about 23.4 million hectareswas treated by various soil conservation measures. Against the VI FYPtarget of covering additional 7 million hectares under soil and waterconservation measures, the achievement was 6 million hectares. Thus, bythe end of VI FYP, the area treated under soil and water conservationmeasures was 29.4 million hectares. About 80 million hectares out of thetotal net cultivated land of 140 million hectares is estimated to be sufferingfrom varying degrees of soil degradation. According to the assessment in


the VII FYP reclamation and development of about 40 million hectares waspossible but needed huge effort to achieve this possible target.

The VIII FYP provided more discussion relating to the state of useof natural resources. The per capita availability of land is declining. Withthe assumed rate of population growth it will decline to 0.3 hectares by 2007from 0.89 hectares in 1950. For the animal population the decline is from1.1 hectares in 1995 to 0.6 hectare by 2007. Even with efforts to reclaimthe wasteland and the land affected by salinity, alkalinity and water loggingthe upper limit for net sown area is 141 million hectares. The VIII FYPpoints to the fact that on the average floods affect an area of about 8 millionhectares annually. Out of this area, about 40 per cent is cropped area. Thetotal net cropped area prone to water stress (moisture scarcity) and droughtis about 64 million hectares. The current estimates are that about 16.35tonnes of topsoil is lost per hectare per year.

The Technical Committee on Co-ordination of Agricultural Statistics,set up by the Ministry of Food and Agriculture, recommended a nine-foldclassification of land use for the country. Table 15 presents the land utilisationpattern in India since 1950-51 based on this nine-way classification.

Agriculture is the largest of land use categories in the country. Theavailable estimates show that the net sown area in the country has increasedfrom 118.75 million ha during 1950-51 to about 142 million ha during 1997-98. This constitutes an increase from 41.77 per cent to 46.58 per cent ofthe reported land area. Similarly, the gross cropped area, which includesarea sown more than once and irrigated area have also shown upwardtrend. The gross cropped area, which was 131.89 million ha during 1950-51, increased to 190.76 million ha during 1997-98. The area sown more thanonce, net irrigated area and gross irrigated area have more than doubledduring the same period. While the area sown more than once, which indicatesintensity of land use increased from 13.14 million ha to 48.74 million haduring the above period. The increase in net irrigated area was from 20.85million ha to 54.57 million ha during 1950-51 to 1997-98 whereas thecorresponding figures for gross irrigated area were 22.56 million ha to 72.78million ha.

Forests constitute another important land use category. The recordedforest area in the country was 40.48 million ha during 1950-51 accountingfor 14.24 per cent of the total land area for which land use statistics areavailable. The area under forests increased to 68.86 million ha during 1997-98 (22.58 per cent).2


Table 15. Area under Different Land Use Categories in India(Million Hectares)

Land use category 1950-51 1960-61 1970-71 1980-81 1990-91 1997-98

1.Geographical area 328.73 328.73 328.73 328.73 328.73 328.73

2. Reporting area 284.32 298.46 303.8 304.15 304.87 304.92

i. Forests 40.48 54.05 63.91 67.47 68.00 68.86

ii. Not available for

cultivation 47.52 50.75 44.64 39.62 40.90 41.56

a. Non- agricultural uses 9.36 14.84 16.48 19.66 21.20 22.53

b. Barren and uncultivable

land 38.16 35.91 28.16 19.96 19.70 19.03

iii. Other cultivated land 48.45 37.94 35.06 32.31 30.50 28.36

a. Permanent pastures

and grazing land 6.68 13.97 13.26 11.97 11.80 10.91

b. Miscellaneous tree

crops and groves 19.83 4.46 4.30 3.60 3.70 3.57

c. Cultivable wasteland 22.94 19.21 17.50 16.74 15.00 13.88

iv. Fallow land (a+b) 28.12 22.82 19.88 24.75 23.40 24.12

a. Fallow land other than

current fallow 17.44 11.18 8.76 9.92 9.60 9.76

b. Current fallow 10.68 11.64 11.12 14.83 13.80 14.36

v. Net sown area (vi-iii) 118.75 133.20 140.30 140.0 142.20 142.02

vi Gross cropped area 131.89 152.77 165.8 172.63 185.50 190.76

vii. Area sown more than

once 13.14 19.57 25.52 32.63 41.62 48.74

viii. Net irrigated area 20.85 24.66 31.10 38.72 45.14 54.57

ix. Gross irrigated area 22.56 27.98 38.19 49.78 59.64 72.78

Source: Government of India (2001b).

Land not available for cultivation although showed an increasingtrend during 1950-51 to 1960-61 it has declined considerably since 1960-61.The area under this category shows a marginal increase since 1980-81.However, there are two distinct opposite trends within this category. Thecategory of ‘barren and uncultivable land’ has declined over the yearswhereas the land under non-agricultural uses comprising of land occupiedby buildings, roads and railways, or under water, like rivers or canals or landput to any other uses other than agricultural has shown a consistent upwardtrend. From a mere 9.36 million ha (3.29 per cent) during 1950-51, it hasincreased to about 22.53 million ha (7.39 per cent) during 1997-98.


The strategy for efficient use of land is to optimise its productivityand preserve its quality over time. Increasing forest cover, reducing landdegradation, reclaiming wastelands are now becoming part of such a strategyin the policies.

Land DegradationOver the years, land resources in India have suffered from different

types of degradation due to both biotic and abiotic causes. India, which hasonly 2.4 per cent of the world’s geographical area, supports over 16 percent of the population in the world. The X FYP noted that, India has 0.5 percent of the world’s grazing area but has over 18 per cent of world’s cattlepopulation. Intensive agricultural practices, which rely heavily on water,chemical fertilisers and pesticides, cause problems of water logging andsalinity. In order to increase agricultural production even marginal lands areput under cultivation. Although precise estimates of degraded lands are yetto be determined, Table 16 provides some information about the extent ofsoil degradation in India.

Out of the total geographical area of about 328.7 million ha almost187.8 million ha (57 per cent) are under different types of degradation. Outof these, about 137.9 million ha are moderately degraded. Water run-off isa major cause of soil degradation. Almost 45.3 per cent of the totaldegradation is due to water erosion.

Water and wind erosion result in loss of topsoil, terrain deteriorationand deformation. Chemical deterioration is also another major type of soildegradation. Salinisation and loss of nutrients of slight to moderate degreeare reported. Water logging, which results in physical deterioration, is anothermajor type of degradation of soil in India. Due to widespread degradationvast areas are considered as wastelands. However, estimates of wastelandsdiffer considerably due to definitional inconsistencies. As per the estimatesgiven in Wasteland Atlas of India 2000, 63.9 million hectares or almost 20per cent of the geographical area are treated as wastelands (Table 17). Itmay also be noted that some of the most degraded lands in the country arecommon property resources.


Table 16. Extent of Soil Degradation (Human Induced) by Type ofDegradation (in Million Hectares)

Degradation type Degree of Degradation Area affected

Slight Moderate Strong Extreme Total

Water Erosion 27.3 111.6 5.4 4.6 148.9 45.3

a. Loss of topsoil 27.3 99.8 5.4 - 132.5 40.3

b. Terrain deterioration - 11.8 - 4.6 16.4 5.0

Wind Erosion 0.3 10.1 3.1 - 13.5 4.1

a. Loss of topsoil 0.3 5.5 0.4 - 6.2 1.9

b. Loss of topsoil/terrain

deterioration - 4.6 - - 4.6 1.4

c. Terrain deformation/over

blowing - - 2.7 - 2.7 0.8

Chemical deterioration 6.5 7.3 - - 13.8 4.2

a. Loss of nutrient 3.7 - - - 3.7 1.1

b. Salinisation 2.8 7.3 - - 10.1 3.1

Physical deterioration - - - - 116.6 3.5

Water logging 6.4 5.2 - - 11.6 3.5

Total (affected area) 36.8 137.9 8.5 4.6 187.8 57.1

Land not fit for agriculture

stable terrain 18.2 5.5

Under natural condition 31.2 9.8

Total Geographical Area

of India 328.7 100

Source: Government of India (2002b).

Land Conservation Efforts in IndiaSeveral measures have been adopted in India to conserve the land

resources. Both Central and State governments have launched programmesaimed at land and soil conservation. Sharma and Shukla (1990) provide abrief summary of the government initiatives for wasteland development inIndia. The Central government constituted ‘The Wasteland Surveys andReclamation Committee’ as early as 1959 to make a survey of degradedlands. In 1963, the Planning Commission set up a Committee on NaturalResources under its Natural Resources Division to study wastelandsincluding Saline/Alkaline and waterlogged lands and in 1965 launched aprogramme for survey and reclamation of ravines in India. State Land UseBoards were set up in 1974 in various states for the purpose of determining


Table 17. Classification of Wastelands

Category Area (Million Per Cent ofhectares) Total Geogra-

phical Area

Gullied and or ravinous land 2.1 0.65Land with or without scrub 19.4 6.13Waterlogged and marshy land 1.7 0.52Land affected by salinity/alkalinity –coastal/ inland 2.0 0.65Shifting cultivation area 3.5 1.11Underutilised / degraded notified forest land 14.7 4.44Degraded pastures / grazing land 2.7 0.82Degraded land under plantation crop 0.6 0.18Sands-inland / coastal 0.5 1.58Mining/ industrial wastelands 0.1 0.04Barren rocky/stony waste/ sheet rock area 6.5 2.04Steep sloping area 0.8 0.24Snow covered and / or glacial area 5.6 1.76Total wasteland area 63.9 20.17

Note:120,849.00 sq kms in Jammu and Kashmir is not mapped and hence, not considered forcalculating the percentage.Source: Government of India (2000b)

and monitoring the appropriate land-use in integrated manner. An autonomousbody called the Society for the Promotion of Wasteland Development whosemain objective was afforestation through social forestry was set up in 1982.Later, in 1983, the National Land Board was set up. Besides these, an AllIndia Soil Survey was conducted for identifying and suggesting measuresfor promoting the health of wastelands in different parts of the country. TheNational Land Resources Conservation and Development Commission wasset up in 1983 with the objective of optimal development of wastelands inthe country. Later on, the National Land Use Board was reconstituted asthe National Land Use and Wasteland Development Council (NLWDC)with the twin objectives of proper land use and development of wastelands.Two separate bodies, viz., the National Land Use and Conservation Board(NLCB) and National Wastelands Development Board (NWDB) were setup in 1985. The council is the highest policy planning and coordinating agencyfor all issues concerning the health and scientific management of the country’sland resources. The NLCB involves in the formulation of National Policyand Perspective Plan for conservation, management and development of


land resources of the country, taking into account appropriate land-use andsoil capability and other factors. NWDB is the nodal policy planning andcoordinating agency for utilisation of wastelands for sustainable development.The principal aim of the NWDB is the utilisation of wastelands through amassive programme of afforestation and tree planting.

Besides the above, several poverty alleviation measures also hadan impact on land conservation efforts in India. For example, the Drought-prone Area Programme (DPAP) introduced in 1973-74 was the first majorprogramme aimed at soil and moisture conservation in drought-prone areas.Currently, it is being implemented in 971 blocks across 16 states (X Plan).The Desert Development Programme (DDP) introduced in 1977-78 andbeing implemented in 7 states aims at restoring the ecological balance,conservation of soil and water, and arresting of formation of deserts throughshelter belt plantation. The Integrated Watershed Development Programme(IWDP) started in 1989-90 is yet another programme for developinggovernment wastelands and CPRs, based on village/micro watershed plans.The National Watershed Development Project for Rainfed Areas(NWDPRA) was initiated in 1990-91 with the twin objectives of improvingagricultural production in rainfed areas and to restore ecological balance.The Technology Development Extension and Training (TDET) scheme waslaunched in 1993-94 and hundred per cent Central grants are provided forprojects relating to demonstration of technologies for development ofwastelands. Likewise, the Investment Promotion Scheme (IPS) launchedin 1994-95 promotes participation of the corporate sector and financialinstitutions in the development of non-forest wastelands. Measures are alsotaken to control shifting cultivation and settle the jhumia families on apermanent basis. The Watershed Development Programme in ShiftingCultivation Areas (WDPSCA) was first launched during V plan as a pilotproject and was revived in 1994-95 for the north-eastern states. A WatershedDevelopment Fund (WDF) was set up in 2000-01 for channelising greaterresources for rainfed areas.

Since the extent of degradation of land and area under wasteland inthe country is a matter of conjecture, it is proposed to set up a NationalManagement Information System during the X Plan. The Plan also proposesto formulate a National Policy on Land Resources Management for optimummanagement of land resources to meet the socio-economic demands. It isalso expected to promote an institutional framework that would encourageproductive utilisation of land. The X Plan also highlights the need to identifyand assess ‘hot spots’ of land degradation so that they get maximum benefitsfrom the limited resources available.


Water ResourcesThe concern on the optimal use of water with respect to its

conservation was less conspicuous in the initial stages of economicdevelopment planning as the emphasis was on the development of waterservices for accelerating agricultural growth. The VIII Five Year Plandrew attention to the rising costs of using water and the need to increaseproductivity of water harnessed through irrigation. Discussing the problemof water scarcity, the X Plan notes that unless urgent steps are taken, water,for both drinking and irrigation purposes, may become the single mostimportant problem by the end of the decade.

Although the endowment of water resources appears to be abundantthere are wide variations in the availability of fresh water in India overdifferent regions and over different periods in a year. The pressure on theavailable water is increasing due to growing population. India, which has2.45 per cent of the world’s land resources, has roughly four per cent of theworld’s fresh water resources whereas the country’s population is about 16per cent of the world’s population. In 1990, India was ranked at 42nd positionamong 100 countries by per capita water availability (Planning Commission,2000). The report of the National Commission for Integrated WaterResources Development 1999 provides estimates of water availability inIndia under strict assumptions and with certain limitations. The estimates ofwater are made on river basin-wise which are the natural hydrologic units.The water resource of Ganga-Brahmaputra-Meghna basin is estimated at1200 km3, which is 60 per cent of the total water resource flows while thebasin occupies 33 per cent of the geographical area. Water resource ofwest flowing rivers of south of Tapi is estimated as 200 km3, which is 11 percent of the total water resource, whereas the basin occupies only threepercent of the geographical area of the country. The remaining 64 per centof the area has a water resource of only 553 km3. The total replenishablegroundwater resource is estimated at 432 Km3. The total water resource ofthe country is estimated at 1952.87 km3.

Different authorities have provided estimates of the utilisable water,which is the quantum of water that can be withdrawn from its place ofnatural occurrence. The irrigation commission 1972 placed the country’sutilisable quantities at 666 km3 from surface water. The National Commissionon Agriculture estimated the utilisable quantity as 700 km3. The CentralWater Commission estimated the utilisable surface water in each river basinconsidering the suitable sites / locations for diversions and storage structuresto achieve the ultimate irrigation potential of 76 million ha and to satisfy the


demands of domestic, industrial and other sectors by 2025. Total utilisableflow in the river basins was estimated as 690.31 km3 which was acceptedby the National Commission for Integrated Water Resources Development1999. Out of the 432 Km3 of replenishable groundwater 396 Km3 has beenestimated as utilisable. Some estimates of water utilisation are also available.The total withdrawal /utilisation for all uses in the year 1990 was 552 Km3

or 655 m3 /person/year (Government of India 1999). Out of the total waterutilised in the country irrigation accounted for nearly 83 per cent; followedby drinking and municipal use (4.5 per cent) energy development (3.5 percent) and industries (3 per cent). Other activities claimed approximately 6per cent of the total use.

The National Commission 1999 has also estimated waterrequirement for the years 2010, 2025 and 2050 (Table 18). Water requirementis related to population, demand for food, production of non-food agriculturaland industrial items, production of energy and improvement in the quality oflife and preservation of ecology and environment. Information on most ofthe above is inadequate and several strict assumptions have been made forestimating the water requirement.

As per the estimates, the demand for water is likely to increaseover the years. Water demand for irrigation has been estimated between628 Km3 (Low Demand Scenario) and 807 Km3 (High Demand Scenario)for the year 2050. Taking into account the norm of 220 litres per capita perday (lpcd) for the urban areas and 150 lpcd for the rural areas the totalrequirement for domestic use for rural and urban areas has been estimatedat 111 Km3 and 90 Km3 under the two scenarios by 2050. The waterrequirement for industrial development is estimated as 81 Km3 and thosefor energy and power sector for high and low demand scenarios as 70 Km3

and 63 Km3 respectively for the year 2050. The total water requirement ofthe country has been estimated as 694 to 710, 784 to 850 and 973 to 1180Km3 by the years 2010, 2025 and 2050 respectively depending on the lowdemand and high demand scenarios. Irrigation would continue to have thehighest water requirement, between 628-807 Km3 (or about 68 per cent oftotal water requirement) followed by domestic water use, including drinkingand bovine needs, at about 90-111 Km3 (or about ten per cent of the totalwater requirement) in the year 2050. The projected water use per capitaper year in the year 2050 would be about 725-750 m3 as compared to about650 m3 at present.


Table 18. Water Requirement for Different Uses (Quantity in Km3)

Uses Year 1997-98 Year 2010 Year 2025 Year 2050

Low High Per Low High Per Low High Per

cent cent cent

Irrigation 524 543 557 78 561 611 72 628 807 68

Domestic 30 42 43 6 55 62 7 90 111 9

Industries 30 37 37 5 67 67 8 81 81 7

Power 9 18 19 3 31 33 4 63 70 6

Inland

Navigation 0 7 7 1 10 10 1 15 15 1

Flood control 0 0 0 0 0 0 0 0 0 0

Environment

(afforestation

and ecology) 0 5 5 1 10 10 1 20 20 2

Evaporation

Losses 36 42 42 6 50 50 6 76 76 7

Total 629 694 710 100 784 843 100 973 1,180 100


The problems due to pollution arising from municipal sewage, urbanand rural wastes, industrial effluents, chemical fertilisers and pesticides allpose serious threat to the quality of available water. Water quality criteriahave been developed for various categories of beneficial uses ranging fromdrinking water, outdoor bathing, propagation of wildlife and fisheries, irrigation,industrial cooling and controlled waste disposal. The relevant parametersare colour, odour, floatable material, pH, phenols and hydrocarbons. Basedon the water quality data generated by the Central Pollution Control Boardover the years 13 heavily and 26 medium polluted rivers and 26 mediumpolluted river’s stretches have been identified in the country. The pollutantsinclude dissolved oxygen, bio-chemical oxygen demand and total coliforms.It has been noted that in most of the rivers in India these parameters are notadequate to indicate the overall health of the water body. Groundwatercontamination is also a major problem in India.

Groundwater contamination is from two major sources: one, inherentin the form of contamination caused by the very nature of geological formationand the other, caused by human interference. Excess fluoride, excess arsenicand excess iron are due to the very nature of geological formation. Theexcess application of chemical fertilisers having high amount of nitrogen,


untreated domestic sewage causing biological contamination, discharge ofuntreated industrial effluents and excess pumping of groundwater in coastalareas leading to brackishness are examples of contamination due to humaninterference.

Lack of adequate access to safe drinking water by the population,which leads to health hazards, is yet another challenge that India faces. Asper the Census of India, if a household has access to drinking water suppliedfrom a tap, hand pump/tube well within or outside the premises, it is consideredas having access to safe drinking water. According to Census of India1991, the coverage of households in India having access to safe drinkingwater was 62 per cent comprising 81 per cent of urban households andaround 56 per cent of rural households. Lack of access to safe drinkingwater and poor sanitation poses major health risks. The water-borne diseasesinclude hepatitis A, cholera, typhoid, polio, diarrhoea and amoebiasis.Important water associated diseases include malaria, filarial, dengue, poliomyelitis, heiminthis and infectious hepatitis.

Realising that water is becoming a scarce commodity efforts arebeing made to ensure its efficient use. Since irrigation use constitutes amajor use of water resources in the country, the need to improve water useefficiency in the existing irrigation projects through modernisation, renovationand upgradation is being recognised. The National Water ManagementProject (NWMP), an externally aided project, with the objective to improveirrigation coverage and agricultural productivity was implemented during1987-95. Water Resource Consolidation Projects have been implementedin some states like Haryana, Tamil Nadu and Orissa during the Eighth Planwhich envisages the completion of some incomplete major and mediumprojects and strengthening of institutions on the lines of Participatory IrrigationManagement / Irrigation Management Transfer (PIM/ IMT). Some stateshave revised the water rates according to the National Water Policy 1987.The National Water Policy 1987 says that water rates should be such as toconvey its scarcity value to the users and motivate them in favour of efficientwater uses. Besides, the rates must be adequate to cover annual maintenanceand operation charges and recover a part of the fixed cost. Activities relatedto the removal of water logging and restoration of saline and alkaline areasin the irrigated commands are included in the Centrally Sponsored CommandArea Development Programme. A close integration of water use and landuse policies is called for.

Considerable attention is also paid to provide safe drinking water inboth rural and urban areas. The National Water Policy 1987 gave priority to


drinking water over other uses. Programmes like Accelerated Rural WaterSupply Programme (ARWSP), the Pradhan Manthri Gramodaya Yojana –Rural Drinking Water (PMGY-RDW) is being implemented to providedrinking water to the rural habitations. Considerable success has beenachieved in meeting the drinking water needs of the rural population. Withan investment of over Rs 34,000 crores, 91.06 per cent of the rural habitationshave been fully covered with drinking water facilities and 7.93 per cent arepartially covered (Government of India 2003). For urban water supply asimilar programme called the Accelerated Urban Water Supply Programmewas launched in 1993-94. The programme aims at supplying water to townswith a population of less than 20,000 as per the 1991 Census. The NationalWater Policy 2002 also emphasises the need for integrated water resourcesdevelopment taking hydrological unit such as drainage basin as a whole orfor a sub-basin multi-sectorally taking into account surface and groundwaterfor sustainable use incorporating quantity and quality aspects. The policyalso states the need for adopting non-conventional methods for utilisation ofwater such as through inter-basin transfers, artificial recharge of groundwaterand desalinisation of brackish or sea water, as well as traditional waterconservation practices like rainwater harvesting, including roof-top rainwaterharvesting.

Efforts are also taken for assessment of water availability and formonitoring the quality of water. The Central Water Commission is maintaininga large network of about 877 hydrological observation stations in the keylocations of the river basin systems of India for this purpose. Some of thesestations are also engaged in water quality monitoring. The groundwaterquality is being monitored by the Central Ground Water Board through anetwork of 14,995 monitoring stations set up in different parts of the country.The Central Pollution Control Board (CPCB) has a major responsibility ofmonitoring water quality in various water bodies all over the country. Thereare also several Acts like the Water (Prevention and Control of Pollution)Act 1974, the Environment Protection Act 1986, etc., for dealing withmatters related to water pollution.

There are also a number of programmes that have been initiated torestore water quality and sustain rivers, lakes and wetlands. The river cleaningprogramme was started with the launching of Ganga Action Plan Phase I inJune 1985, and was followed by Phase II and the National River ConservationPlan covering all major rivers in the country. Similarly, Lake ConservationProgramme and Wetland Conservation Programmes were also launched.Considering the regional variations in the availability of water resources


there are also proposals for inter basin transfer of water resources andlinking of major rivers.

FisheriesIndia with a coastline of about 8129 kms, 0.5 million km2 of

continental shelf and 2.02 million km2 of Exclusive Economic Zone (EEZ),is a major marine fish producer, ranking seventh in the world. The warm,fertile inshore waters of India are among the most productive fishing groundsin the world, yielding shrimps, sardines, mackerels and a variety of othermarine fish. Inland fisheries such as freshwater and brackish wateraquaculture involving mostly shrimp culture and capture fisheries in rivers,estuaries, lakes and reservoirs also are equally rich. It may be noted thatboth marine and inland fish production in India have increased many foldsince 1950-51. The total fish production increased from 0.75 million tonnesduring 1950-51 to 5.6 million tonnes by 2000-01 (Table 19). The contributionof fisheries sector to GDP has also increased over the years. The percentageshare of fisheries sector to total GDP (current prices) has increased from0.62 per cent during 1970-71 to 1.38 by 1998-99.

Marine products comprise an important component of the exportbasket from India. The quantum and value of marine products export fromIndia has increased over the years. The share of exports of marine productsincreased from 0.74 per cent during 1960-61 to 3.13 per cent by 2000-01(Table 20).

Table 19. Fish Production in India (in Million Tonnes)

Year Marine Inland Total

1950-51 0.53 0.22 0.751960-61 0.88 0.28 1.161970-71 1.09 0.67 1.761980-81 1.56 0.89 2.421990-91 2.30 1.54 3.842000-01(Provisional) 2.81 2.85 5.60

Source : Government of India 2000c and 2002b


Table 20. Growth of Marine Products Export from India

Year Quantity (Million Value (US $ Share of Marine Products (Tonnes) (Million) to total Exports

1960-61 0.20 10 0.741970-71 0.32 40 1.971980-81 0.69 274 3.231990-91 0.16 535 2.952000-01 0.50 1,394 3.13

Source : Government of India (2003)

The area as well as production of fish from aquaculture is also onincrease in India since 1980. While the area under brackish water aquacultureincreased from a negligible 0.05 million ha during 1980 to about 14.1 millionha by 1999, production increased from 0.20 to 6.68 million tonnes during thesame period (Sugunan 1997 and Government of India 2002b).

Fisheries ManagementIn India, fisheries are under the control of individual state and

governed according to the Indian Fisheries Act 1927. The fishermen arerequired to obtain a licence from the local office of the state fisheriesdepartment and follow mesh size and other regulations in fishing whichvaries across states. Cooperative societies and the state-level fisheriesdevelopment corporations are also involved in fishing and marketingoperations.

India’s fisheries policy had aimed at maximizing foreign exchangesince early 1960s. The sudden emergence in the 1960s of internationalmarkets (particularly in the USA and Japan) for luxury frozen fish (such asprawns, lobsters, and tuna) combined with the pressure of severe balanceof payments constraints led the Indian government to actively support thegrowth of harvesting and processing capacities in places where prawns andlobsters are highly concentrated without considering its impact on theresource stock (Kurien 1978). In order to augment fish production the‘modernisation growth oriented’ model of development largely premised onthe experience of the more developed countries was adopted. This involvedthe superimposition of a modern, capital intensive, specialized technologyover the largely labour intensive traditional base. The overall fish and prawnharvest started to decline soon and the marine fishery sector started to headtowards an ecological crisis (Kurien 1993).


However, it may be noted that marine fishing is very complex sincefish stocks fluctuate unpredictably and their population dynamics is not wellunderstood. Therefore, it is difficult to establish clear and predictableconnections between fishermen’s harvesting behaviour and the state of theresource. Even the signs and causes of depletion are hard to interpret anddetermine. For example, in Kerala, a marked decrease in total fish landingsoccurred in the mid 1970s and persisted throughout the 1980s. Small scalefishermen’s organizations and activists put the blame for such a decline onthe rapacious operations of a sizeable fleet of trawlers which entered thesector by the late 1960s and the early 1970s. The government eventuallydecided on a seasonal ban on trawling in the early 1990s. Yet, in 1991, dueto the abundant presence of pelagic fish species off the coast of Kerala,there has been a sudden and unexpected increase in the aggregate catchwhich more or less equaled the peak average level attained in 1971-75. Theunpredictable nature of fisheries is a major challenge for fisheriesmanagement. The fisheries sector also faces problems arising out of theincreasing human population in coastal zone, development of industries andports, discharge of effluents and municipal sewage etc.

In the light of the above, measures have been adopted to increasefish production on a sustainable basis. Besides regulating fishing practicesand prohibiting adoption of destructive fishing practices by the fishermen,various measures have been adopted to protect fisheries habitat. Sincemarine productivity is concentrated in small areas of coral reefs, lagoons,mangroves, etc., it was realized that protecting these habitats under MarineProtected Area would safeguard the vital life support process of the seaand ensure sustained fish production (Philips 1999). Protected marine areasin India comprise of national parks and wildlife sanctuaries declared in coastalwetlands, especially mangroves, coral reefs and lagoons under Wildlife(Protection) Act 1972. Coastal Regulation Zone (CRZ) Act 1991 wasenacted by the Government of India to protect the Indian coast fromdegradation. The CRZ includes ecologically sensitive areas, mangroves,coral reefs area close to breeding ground of fish and other marine life, andMarine Protected Areas.

A working Group constituted by the Ministry of Agriculture inAugust 1990 had revalidated the fishery resource potential of Indian EEZ at3.9 million tonnes of which 2.21 million tonnes were within a region of depthup to 50 metres. It is found that the resource within 50 metres depth regionsis at present exploited to the optimum level. The resource potential beyond50 metres is estimated at 1.69 million tonnes. Some of the commercially


important resources under exploited beyond 50 meters depth regions aretuna (2.09 lakhs tonnes), Tunnies (2.42 lakh tonnes), Ribbon fish (2.16 lakhtonnes), Perches(1.25 lakh tonnes) and Cat fish (0.63 lakhs tonnes) (Sugunan1997).

In 1991, the Government of India modified the deep fishing policyencouraging long lease of fishing vessels and permitting test fishing as preludeto joint venture. The Marine Products Export Development Authority(MPEDA) initiated a number of steps for increasing the fleet strength forexploitation of under exploited resource and for encouraging the existingoutrigger trawlers to modify for diversified fishing.

The government also adopted measures to augment inland fishproduction through intensive aquaculture practices. To augment productionthrough aquaculture and to sustain and increase the exports, an Aquaculturewing was established in the year 1979 to promote aquaculture in coastalbrackish water areas. The assistance provided by the aquaculture wingincludes conducting surveys to identify suitable sites for farming, technicaladvice on various aspects of farming and training the farmers, promotingeco-friendly aquaculture etc. The increase in area under aquaculture andproduction was made possible mainly because of the national efforts whichintroduced scientific composite fish farming through a network of FishFarmer’s Development Agencies (FFDA). The Ministry of Agriculturelaunched FFDA during 1973-74 to popularize fish farming. Introduction ofimproved fish farming technology through FFDAs has helped increase theaverage productivity of the ponds from a low 50 kg/ha/yr prior to theintroduction of the FFDA scheme during 1973-74 to over 2100 kg/ha during1992-93 (Sugunan 1997). The government has constructed 47 commercialfish seed farms and hatcheries under both the National Programme for FishSeed Development and the Inland Fisheries Project with World Bankassistance. Brackish water aquaculture, mainly shrimp farming, involvesthree categories of farmers/entrepreneurs, i.e., small and medium farmers,middle-level entrepreneurs and big entrepreneurs. The involvement of theprivate sector in shrimp farming based on middle-level technology, utilizingthe resource and technological inputs available locally or elsewhere, is ofvery recent origin. Along India’s east and west coasts, particularly those ofAndhra Pradesh and Tamil Nadu, a large number of commercial integratedshrimp farming units with foreign collaboration are emerging and adoptingscientific culture systems with facilities for production of shrimp seed, shrimpfeed and processing. Constituted under the Environment (Protection) Act,1986, the Aquaculture Authority is mandated to protect the ecologically


fragile coastal areas, sea shore, water front and other areas through regulationof shrimp culture in coastal States and Union Territories of India. TheAuthority promotes development of sustainable and responsible shrimpfarming practices within and outside the Coastal Regulation Zone.

ForestsThe VII FYP also pointed to the depleted state of forestry resources.

It noted that the National Forest Policy of 1952 stipulated that the countryshould have a coverage of at least 1/3 of its geographical area under forestwith 60 per cent in hilly tracts and 20 per cent in the plains. The estimatesat the time, however, showed coverage of 23 per cent or less. It was alsoestimated that 1.5 million hectares of forest cover was lost annually basedon the prevailing trends then. These adverse trends were related to thegrowing demands for forest resources by the economy without adequateinvestment on preservation. The VII Five-Year Plan re-emphasised theneed to bring 1/3 of geographical area under forest cover by the year 2000.

India has a recorded forest cover of 76.52 million hectaresaccounting about 23 per cent of total geographic area as against 33 per centrecommended by the National Forest Policy 1988. The per capita availabilityof forests in India is 0.08 ha which is a tenth of the world average of 0.8 ha.Statutorily forests have been classified into Reserved, Protected andUnclassed forests. Table 21 reveals that the area under forests has increasedover the years. The reserved forest, which was about 47 per cent of thetotal forest area during 1951-52, increased to about 54.43 per cent by 1999.The area classified as protected forests also considerably increased duringthis period whereas unclassed forest recorded a sharp decline. However,according to Forest Survey of India (1999), only 63.34 million hectares (about19.39 hectares) can be classified as actual forest cover3.

Forest Types and Changes in Forest CoverThe forests in India have been classified into 16 types, ranging

from tropical wet evergreen to alpine with the tropical deciduous types(both moist and dry) constituting the bulk (over 65 per cent) (TERI 1999).Nearly eight per cent of the actual forest cover consists of tropical wetevergreen. The altitudinal distribution of the actual forest cover shows thatin both the plains and the hills, it is less than the 33 per cent stipulated in theNational Forest Policies of 1952 and 1988. Over two thirds of the actualforest cover is located at altitudes less than 600m, one-fourth is located ataltitudes ranging from 600 to 1,800 m and over one-twelfth at altitudesranging from 1,800 to 4,000 m. The occurrence of forests is negligible ataltitudes more than 4,000m (TERI 1999).


Table 21. Classification of Total Forest Area (km2): 1951–52 to1999

Classes 1951–52 1960–61 1970–71 1979–80 1991 1997 1999

Total forest area 734,441 750,379 738,444 729,077 770,078 765,210 765,253

Area by legal status

Reserved 344,830 316,092 360,247 372,523 414,916 416,516 416,547

(46.95) (42.12) (48.78) (51.10) (53.88) (54.43) (54.43)

Protected 152,017 240,543 212,739 225,364 233,080 223,309 223,321

(20.70) (32.06) (28.81) (30.91) (30.27) (29.18) (29.18)

Unclassed 237,594 112,129 115,139 105,579 122,081 125,385 125,385

(32.35) (14.94) (15.59) (14.48) (15.85) (16.39) (16.39)

Source: Government of India (2000d); Forest Survey of India (1997 and 1999)

Note: Figures in parenthesis indicate percentages.

The forest cover is broadly classified into 3 classes, namely, denseforest, open forest and mangrove and is based on internationally adoptednorms of classification. Though the area under forests has remainedpractically the same. According to Forest Survey of India, only 377,358sq.kms (11.48 per cent of the total geographical area) can be considered asdense forest (crown density 40 per cent and above). Significantly, the areaunder dense forest, which showed a decline during the period 1995-1997has shown a marginal increase during 1997-1999 (Table 22). A marginaldecline in the open forest whose crown density was between 10 and 40 percent was also observed during the same period. Nearly 48271 sq kms (0.15per cent) constitute mangroves.

Forest Stock and GrowthThe average growing stock of the forest cover is over 74 m3/ha,

which compares poorly with the world average of 110 m3/ha. The totalestimated growing stock of wood in the country is 4,741 million cubic metreswith an annual increment of 88 million cubic metres amounting to 1.86 percent of the total growing stock. Considering the recorded forest area of thecountry, the average annual production of 88 million cubic metres works outto 1.15 m3/ha (or 1.37 m3/ha taking into account the actual forest cover)which is much less than the world average of 2.1 m3/ha. Thus, in terms ofboth growing stock and annual production India is far behind many of thecountries of the world. The productivity of forests in India is estimated to bearound 77.3 m3 / hectare (TERI 1999).


Tab

le 2

2. L

and

Cov

er a

s P

er 1

987,

199

7 an

d 2

001

Ass

essm

ents

in I

nd

ia

Cat

egor

yA

rea

(km

2 )Pe

rcen

tage

of t

heA

rea

(km

2 )Pe

rcen

tage

of t

heA

rea

(km

2 )Pe

rcen

tage

of t

heA

rea

(km

2 )Pe

rcen

tage

of t

he

1987

Tot

al G

eogr

aphi

-

1997

Tot

al G

eogr

aphi

-

1999

Tot

al G

eogr

aphi

-

2001

Tot

al G

eogr

aphi

-ca

l Are

a 19

87ca

l Are

a 19

97ca

l Are

a 19

99ca

l Are

a 20

0l

Den

se fo

rest

(cro

wn

dens

ity

40 p

er c

ent a

ndab

ove)

361,

412

10.9

936

7,26

011

.237

7,35

811

.48

416,

809

12.6

8O

pen

fore

st(c

row

n de

nsit

y10

per

cen

t to

less

than

40

per c

ent)

276,

583

8.41

261,

310

8.0

255,

064

7.76

258,

729

7.87

Man

grov

es4,

046

0.12

4,82

70.

154,

871

0.15

4,48

2Sc

rub

area

(tre

ela

nds

wit

h le

ssth

an 1

0 pe

r cen

tcr

own

dens

ity)

76,

796

2.34

57,2

111.

751

,896

1.58

47,3

181.

44N

on-f

ores

t25

5,74

3677

.79

2,59

6,65

579

.02,

598,

074

79.0

32,

611,

725

79.4

5U

n-in

terp

rete

d 1

1,52

4

Gra

nd to

tal

328,

7797

100

3,28

7,26

310

03,

287,

263

100

3,28

7,26

33,

287,

263

Sour

ce: F

ores

t Sur

vey

of In

dia

(198

9 an

d 19

95) a

nd M

oEF

(199

9 an

d 20

01a)


Forest ProductsForests are being harvested for timber, industrial raw material, non

wood forest products and fuelwood. One observes a declining trend in thecontribution of forestry sector to the gross domestic product over the years.The percentage share of forestry and logging in total GDP which was about2.66 per cent during 1980–81 has declined to about less than one per centby 2000–01 (Table 23).

Table 23. Contribution (Million Rupees) of Forestry and Loggingto the Gross Domestic Product and its Percentage Share:

1980–81 to 1996–97Year Contribution to GDP by Percentage Share of Forestry

Forestry and Logging and Logging in Total GDP

Current Constant Prices Current ConstantPrices (1980/81) Prices Prices

1980/81 32,620 32,620 2.66 2.661990/91 82,810 31,050 1.73 1.461996/97 112,930 29,300 0.98 0.99

Source: TERI (1999) ; EPW (2002).

As evident from Table 24 firewood is the major contributor to thetotal value of output from forestry sector. While the value of output fromfirewood had remained almost the same during 1980–81 to 1994–95, thevalue of output from industrial wood declined sharply at constant prices.The value of output from minor forest products which was about Rs 4,030million during 1980–81 increased to Rs 6,390 million by 1990–91. However,since then it has recorded a decline to about Rs 4,270 million at constantprices by 1994–95.

Table 24. Value of Output (Million Rupees) from Forestry andLogging: 1980–81 to 1994–95

Current Prices Constant (1980/81 Prices)

Year Industrial Firewood Minor Total Industrial Firewood Minor Total Wood Forest Wood Forest

Product Product

1980–81 9,130 23,090 4,030 36,250 9,130 23,090 4,030 36,2501990–91 14,700 59,910 17,400 92,010 4,610 23,500 6,390 34,5001994–95 18,080 79,900 15,030 114,010 3,950 23,610 4,270 31,830

Source: TERI (1999)


The gap between consumption and recorded production of fuelwoodis seen to be widening. As per TERI (1998) estimates the annual withdrawalof fuelwood is 260 million cubic metres against the estimated productioncapacity of about 52.6 million cubic metres. Similarly, the gap between therequirement and production of industrial wood also increased considerablyduring 1947-97. While the requirement and production of industrial woodwas 2.5 million cubic metres during 1947, the requirement by 1997 rose toabout 34 million cubic metres. The production during 1997 was only 14million cubic metres meeting only about 41 per cent of the total requirementin that year (Table 25).

Table 25. Scenario of Industrial Wood (Million Cubic Metres)

Year Requirement Production Gap Production as Percentage of Requirement

1947 2.5 2.5 0 1001997 34.0 14.0 20 41Rise (per cent) 1,260.0 460.0 - -

Source: TERI (1998)

Pressures on ForestForests in India have been subjected to various sorts of biotic

pressures. Diversion of forest land for non-forest uses has been a majorproblem. It has been estimated that during the first 50 years of independence,5.3 million hectares of forest land (about seven per cent of total forest area)have been diverted to other uses such as agriculture, river valley projects,mining, industries, township, roads, transmission lines, etc (TERI 1999).Degradation of actual forest cover is also a major cause of concern. It hasbeen noted that the increasing pressure of population and livestock hascontributed to the degradation of forests. Encroachments, shifting cultivation,excessive grazing, frequent fires and other biotic pressures have adverselyaffected the natural regeneration of forests.

Efforts for Conserving ForestsTaking the above into account, the Government of India has adopted

several initiatives for the management of forest resources on a sustainablebasis and to increase the forest cover and its productivity. Some of theimportant initiatives are the enactment of Forest Conservation Act 1980. Inorder to reduce the biotic pressures, the government had launched a massiveafforestation programme including social, farm and agro forestry. The adoptionof National Forest Policy 1952 and 1988 was a major step towards protecting


forests in India. Efforts are being made to involve the local communities inprotection, management and development of forests, for example, the jointforest management. The National Forestry Action Programme translatesthe objectives of forest conservation into issue based programmes. There isa comprehensive work plan for sustainable development of Indian forestsfor the next 20 years which focuses on protection of existing forest resources,improvement in forest productivity, reduction in total demand of forestproducts, strengthening of policy and institutional framework and expansionof forest area. The National Afforestation and Ecodevelopment Board hasbeen created to promote regeneration of degraded forests and ecologicallyfragile areas. Its efforts are complemented by the activities of the NationalWasteland Development Board (MoEF 2002).

Biodiversity and its ConservationIndia’s wide variety of agro-climatic zones that harbour a rich

repository of biological resources endows it with a unique phyto-geographicaland agro-ecological diversity. With only 2.5 per cent of the total land area ofthe world, the known biological diversity of India contributes 8 per cent tothe total known global biological diversity with a species count of 0.126million. It is one of the 12 mega-biodiversity regions of the world and hastwo of the 18 identified hot-spots (Western Ghats and the Eastern Himalayas)of the world. Forests are the habitat for wildlife. The long coastline and thetropical climate favour a multitude of coastal and offshore marine ecosystem.

There are about 45,000 species of plants and over 68,000 speciesof animals distributed in 2 bio-geographical realms and 12 bio-geographicalprovinces. Besides, there is also a sizeable endemic component. Among theflora, about 15,000 species are flowering plants, of which nearly 33 per centis endemic, located chiefly in 26 endemic centres. India has been recognizedas one among the twelve centres of origin of diversity of several plantspecies in the world. India’s rich germ plasm resources include 51 speciesof cereals and millets, 104 species of fruits, 27 species of spices andcondiments, 55 species of vegetables and pulses, 24 species of fibre crops,12 species of oil seeds etc., (MoEF 1994). India has also the distinction ofhaving some of the widest range of breeds within each species therebyrepresenting a significant percentage of world’s domesticated livestockdiversity.

It may be noted that importance and uses of biodiversity in Indiainclude its ethical values, ecosystem services and values of biodiversity,livelihoods, health and food security values and economic values. However,the biodiversity in India has been facing several threats. The causes for


biodiversity loss are manifold. Rapid expansion of agriculture and industry,urbanisation and large scale development projects like dams, highways,mining and expansion and intensification of human activities are major threatsto biodiversity mainly through destruction and degradation of habitat. Geneticerosion has also taken place in domesticated species of plants and animalsmainly because of introduction and promotion of a few ‘high yielding’ varietiesof crops and livestock.

In situ ConservationIndia has a wide network of in situ conservation through the

establishment of National Park and Wildlife Sanctuaries. These are generallyconcerned with selected keystone species of both ecological and aestheticalvalue, including those which have become endangered due to significantdegradation in their habitats. Currently, there are 89 National Parks and 496Wildlife Sanctuaries covering 1.83 million sq.kms in the major bio-geographiczones of India. In order to ensure the unhindered evolution of micro-organisms, plants and animals in their totality, and as part of the naturalecosystem, the Government of India has designated 7 Biosphere Reservesbased on a comprehensive concept of conservation, evolved in 1971 by theUNESCO’s Man and Biosphere Programme (Sinha 1998). Considerableeffort has been made in restoring a viable population of important animalssuch as tigers, elephants, lions, rhinoceros, etc. For example, Project Tigerlaunched in 1973, has been successful in increasing tiger population. Similarly,Project Elephant launched in 1991-92 aims at ensuring long term survival ofidentified viable populations and restoring their lost and degraded habitatsand also aims to mitigate man elephant conflicts. A programme called ‘eco-development’ which integrates the ecological and economic parameters forsustained conservation of ecosystems by involving the local communitieswith the maintenance of earmarked regions surrounding protected areashas been initiated in recent years. India has also launched programmes forscientific management and wise use of the fragile ecosystem. Specificprogrammes for management and conservation of wetlands, mangrovesand coral reefs etc., are being implemented. Six internationally significantwetlands of India have been declared as ‘Ramsar Sites’ under the Ramsarconvention. Under World Heritage Convention five natural sites have beendeclared as ‘World Heritage Sites’.

Indian systems of medicine have recognised the medicinal use ofseveral species of plants. The use of over 7,000 species has been conservedand ecosystems with high medicinal plant diversity have been protected assacred forests (MoEF 1994).


Ex situ ConservationTo complement in situ conservation, attention has been paid to ex

situ conservation by establishing Botanical gardens and Animal parks. Thereare about 33 Botanical gardens for conservation of plant diversity and severalzoos and parks for ex situ preservation of wild life. The ex situ collection ofwildlife is primarily for the purpose of captive breeding and multiplication ofthreatened species for reintroduction into the wild and for the purpose ofpublic education.

Legal and Policy Framework for Biodiversity ConservationOver time, India has evolved a legal and policy framework for the

conservation of biodiversity in the country. On the legal side there, are anumber of measures to protect biodiversity: the Forest Act 1927, the Wildlife(Protection) Act 1972, the Forest (Conservation) Act 1980 , theEnvironment (Protection) Act 1986, and the recent Biodiversity Act 2002.Various Central Acts are supported by the state laws and statutes concerningforests and other natural resources. Policies, strategies and action plansrelevant for the conservation of biodiversity are several and include NationalForest Policy amended in 1988, National Conservation Strategy and PolicyStatement for Environment and Sustainable Development, National Policyand Macro Level Action Strategy on Biodiversity and Environmental ActionPlan.

India is a signatory to the Convention on International Trade in WildSpecies of Endangered Flora and Fauna (CITES) to regulate / ban trade inthese species. India is also a signatory to the Convention on BiologicalDiversity 1992. It requires the parties to prepare National BiodiversityStrategy and Action Plan (NBSAP). India has prepared a National Policyand Macro Level Action on Biodiversity through an extensive consultativeprocess. This documents macro level policies, gaps and actions needed forconservation and sustainable use of biological diversity. With the help ofGlobal Environment Facility India has also prepared a National BiodiversityStrategy and Action Plan (NBSAP). Key features of the programme includethe emphasis on decentralised state level planning and the use ofinterdisciplinary working groups to involve all sectors concerned withbiodiversity conservation. Under NBSAP, about 20 local micro-planningprocesses at village to district levels, 33 state and Union Territory levelprocesses, 10 planning exercises at ecological regions cutting across statesare engaged in collecting a variety of area specific information andperspectives. Each of these involves a variety of actors from farmers andfisher folk, tribals to scientists and academicians, governmental and non-


governmental organisations, corporate sector etc. Documentation of localpeople’s knowledge on the status, uses and management of biologicalresources constitutes the People’s Biodiversity Registers (PBRs). Itenvisages the creation of decentralised country-wide database on status ofbiological resources. Preparation of village wise People’ BiodiversityRegisters have been undertaken in a few states. The State Plan for Keralahas also actively promoted documentation of local knowledge regardingbiodiversity in people’s biodiversity registers (Forest Survey of India 2001b).

Documentation, Research and MonitoringThe Botanical Survey of India and the Zoological Survey of India

carry out the surveys of floral and faunal resources in the country. TheForest Survey of India uses remote sensing technology to assess the forestsand tree cover with a view to developing an accurate data base for planningand monitoring. The reports are published at the district, state and nationallevels, besides Red Data Books on threatened/ endangered/ endemic plantand animal species for planning suitable conservation measures. The NationalBureau of Plant Genetic Resources, the National Bureau of Animal GeneticResources, the National Bureau of Fish Genetic Resources are activelyinvolved in collecting information and documenting of plant, animal and fisheryresources in the country.

EnergyThe two sources of vulnerability on energy front have been related

to (1) the reliance on imports for critical energy supplies linked to the lowlevels of export earning capacity of the economy and (2) the burden onenvironment placed by a strategy based on exploitation of the abundantdomestic supplies of coal. An additional factor that underlies these concernsis the present low level of energy consumption relative to population orGDP but clear possibility of a rise in both as economic development takesplace. In other words, securing reliable, cheap and environmentally benignsupplies of energy has become an important policy goal. Before we look atthe trends in energy consumption, which point to the different dimensions ofenergy needs of the economy, we note the concerns highlighted on thepolicy front from time to time.

Addressing the rising demand for energy and the pressures it placeson the economy and resources, the VII FYP focused some attention on the‘renewable sources of energy’. The concern here was on meeting theneeds of rural economy. Given the need for energy and the adverse effectsof over-exploitation of forest resources for fuel wood on the forest wealth,the VII FYP stated that the long-term objective over the next 15 years


would be bringing about a shift from non-commercial sources of energy,which are detrimental from an environmental perspective to an intensifiedrural electrification programme and a viable renewable energy programmefor rural areas. A massive energy plantation programme based on fastgrowing species of trees, plantations on the wastelands, utilisation of bio-gas and bio-mass were considered as feasible options for generation ofenergy for rural areas. The VIII FYP (1992-1997) called for measures toreduce energy intensity in different sectors of the economy through changesin technology and processes. It emphasised the maximum use of renewablesources of energy. It indicated the need for increased hydel generation.

The X FYP (2002-2007) provides a brief but comprehensive policyexpression: “the key issues facing India which have energy implicationsare, therefore, rising population, need for economic growth, access toadequate commercial energy supplies and the financial resources needed toachieve this, rational energy pricing regime, improvements in energyefficiency of both the energy supply and consumption, technologicalupgradation, a matching R&D base and environmental protection”.

The importance of developing a modern energy sector for sustainingeconomic development was recognised early in the planning process.Development of the power sector was predominantly the responsibility ofthe public sector. Non-commercial sources of energy were predominant inrural areas supplying as much as 71.6 per cent of total primary energyconsumption in 1953-54. By 1996-97, the share of non-commercial energydeclined to 34.1 per cent. Energy consumption, including commercial andnon-commercial sources increased from 89.61 million tonnes of oil equivalentin 1953-54 to 373.43 million tonnes of oil equivalent in 1996-97. The increaseby 325 per cent over the 43-year period is far greater than the increase inpopulation by 150 per cent indicating sharp rise in energy consumption withthe growth of the economy. The per capita consumption of electricity hasbeen more rapid than the growth in the consumption of electricity per rupeeof GDP (Figure 16).

Faster growth of electricity use has also been a reflection ofsubstitution of other forms of energy by electricity. For example, the IXFive Year Plan shows that coal accounted for 80 per cent of final commercialenergy consumed in 1953-54 but in 1996-97, this percentage had decreasedto 28.9. The energy sources that showed an increase were petroleumproducts, natural gas and electricity.


Figure 16. Energy Generated Per Capita and Per Rupee of RealGDP: Indices with 1950-51 = 100


By international standards, India’s energy consumption on per capitabasis is very low. Therefore, with further economic growth demand forenergy is likely to increase rapidly. Besides planning for meeting the risingdemand for energy, the volatile nature of international markets for crudepetroleum products, particularly in the 1970s required attention to thedevelopment of domestic sources of energy. Coal being a major mineralresource of the country, thermal power plants have been built using coal asthe feedstock. The coal based power plants account for close to 90 percent of the installed capacity of the thermal power plants of the utilitiestoday. The power plants based on petroleum products and gas account forthe balance 10 per cent.

Petroleum products play a critical role in meeting the energyrequirements of transportation sector, besides their use as a cooking fuel inhouseholds. India relies on imports for over 70 per cent of its requirementsof petroleum products. The need for greater self-reliance in the energysector has to be balanced with the environmental concerns. Given the highash content of Indian coal, attention to technologies that reduce pollutionfrom the use of coal in power plants is important. In this context, programmesaimed at energy use efficiency and conservation have been operating bothin the energy sector and industry. Minimising the loss of energy in transmissionand distribution has received increased attention in recent years with a viewto making the public sector power units economically viable.

The search for ways to supplement energy from non-renewablesources such as the hydrocarbons and fossil fuels has led to the promotion

0

500

1000

1500

2000

2500

3000

3500

Index

(1950-5

1 =

100)

per capita per Re of GDP


of renewable sources of energy. Large potential exists for generating energyfrom bio-mass based fuel, bio-gas and improved wood stoves. Solar energyand wind energy are beginning to be tapped for generating power. Potentialfor mini hydroelectric projects is estimated to be about 10,000 MW whereasthe actual capacities are less than 500 MW. The ocean-based energy remainsuntapped. There have been programmes aimed at utilising energy formbio-gas and bio-mass, especially in the rural areas. Development of minihydroelectric power projects is also being supported in the private sectors.In the transportation sector, there has been a switch to less polluting fuels.The city of Delhi has switched its entire public road transport system tocompressed natural gas. There are attempts to exploit inland water-waysfor transportation wherever potential exists.

The need for further investment in the energy sector to meet thegrowing demand for energy has led to the opening up of this sector forprivate sector participation. This has necessitated several institutionalchanges such as setting up independent regulatory agencies both at thestate level and central level; provision of suitable business mechanisms forgeneration, transmission and distribution of power; supply of fuels and soon. The experience so far is still one of a transition phase. The oil and gasexploration programme has received new impetus with the entry of privatesector in these efforts.

The X Five-Year Plan advocates reducing energy intensity of theeconomy by a variety of measures such as,• energy conservation, optimal fuel-mix, appropriate modal mix intransportation, co-generation of power, recycling, new designs of products;• better roads, better vehicle design to reduce fuel use, use of CNG and

synthetic fuel, better urban planning;• shift to renewable sources of energy; and• R&D for greater energy efficiency.

It also emphasises incorporating environmental considerations inenergy development strategies by (1) including catchment area treatmentand reclamation of degraded land in hydro projects, (2) restricting air andwater pollution to the regulatory norms, and (3) clear safety standards innuclear projects. It also points to the need for afforestation programmesand providing more reliable supply of power to the consumers so that pollutionfrom stand-by generating facilities is avoided.

Population GrowthIt was on an optimistic note that the first Five Year Plan assumed

an annual rate of growth of population at 1.25 per cent based on the


experience of the previous decade. Population growth exceeded 2 per centper year for the first four decades of the plan period. In nearly all thesubsequent FYPs, following the first, control of population growth becamean important policy concern. At over 1 billion people today, India is thesecond largest nation in the world behind China and it is expected thatIndia’s population would exceed China’s in the next 20 years. The pace ofpopulation growth experienced in the past 50 years has been a critical factoroffsetting some of the gains made on the growth front. Larger populationputs pressure on resources, creates greater demand for basic necessities oflife whose supplies are in scarce supply in a developing country and putsinfrastructure, urban and rural under constant strain.

The decadal rates of growth of population have been summarisedin Table 26. It is not merely the high birth rates that have driven the populationgrowth but the declining death rates have had an equally important role inkeeping the population growth at a high level. While the decline in deathrates has been a consequence of development including the impact ofinterventions leading to better health-care, achieving greater control overbirth rates has been the focus of many other policy interventions. The successof various programmes has often been described as disappointing.

The more recent projections of population do show a tendencytoward lower rate of growth in the future and the possibility of stabilisationby 2020. The growth of population has posed challenges for developmentpolicies for a variety of reasons. First, population growth requires growth inthe production of basic necessities of life such as food, clothing, shelter andenergy to adequately meet the needs of rising population. It requires increasedfacilities for education, health, water supply and sanitation. What makes thechallenge harder is that the demand for a number of public goods increasesfaster than the increase in the resources of the government.

Table 26. Decadal Rate of Growth of Population

Year Crude Birth Crude Death Rate Population Growth RateRate per 000 Per Thousand (Per Cent) Per Year

1971 36.9 14.9 2.201981 33.9 12.5 2.141991 29.5 9.8 1.972000 25.8 8.5 1.73



Table 27. State level Variations in the Growth Rates of Populationfor the Recent Two Decades (Per ’000)

States/UTs Crude Birth Rate Crude Death Rate Population Growth Rate*

India 26.1 8.7 17.4Andhra Pradesh 21.7 8.2 13.5Assam 27.0 9.7 17.3Bihar 31.5 8.9 22.6Gujarat 25.4 7.9 17.5Haryana 26.8 7.7 19.1Karnataka 22.3 7.7 14.6Kerala 18.0 6.4 11.6Madhya Pradesh 31.1 10.4 20.7Maharashtra 21.1 7.5 13.6Orissa 24.1 10.7 13.4Punjab 21.5 7.4 14.1Rajasthan 31.1 8.4 22.7Tamil Nadu 19.3 8.0 11.3Uttar Pradesh 32.8 10.5 22.3West Bengal 20.7 7.1 13.6Arunachal Pradesh 22.3 6.0 16.3Chhatisgarh 26.9 9.6 17.3Goa 14.3 7.2 7.1Jharkhand 26.3 8.9 17.4Himachal Pradesh 23.8 7.3 16.5Manipur 18.6 5.4 13.2Meghalaya 28.7 9.1 19.6Mizoram 17.0 5.5 11.5Nagaland 11.8 2.3 9.5Sikkim 21.6 5.8 15.8Tripura 17.0 5.7 11.3Uttaranchal 19.6 6.5 13.1Andaman & NicobarIslands 18.1 5.5 12.6Chandigarh 17.9 3.9 14.0Dadra & Nagar Haveli 34.2 6.6 27.6Daman & Diu 26.9 7.1 19.8Delhi 20.3 4.8 15.5Lakshadweep 25.1 4.7 20.4Pondicherry 17.7 6.9 10.8

Note * Calculated as CBR-CDRSource: Government of India (2001a).


There is also a regional perspective on population growth, reflectingpartly the underlying variation in development across regions. The regionalvariation also reflects the impact of government interventions in education,health and population services. The state-level variation in the growth ratesof population for the recent two decades is given in Table 27 above.


CHAPTER II

STRATEGIES AND PROGRAMMES FOR DEVELOPMENT

1. Institutions for DevelopmentA challenge to policy-making and policy implementation is the

development of institutions and institutional arrangements to effectivelyimplement the development policies. For implementing the developmentpolicies in a heterogeneous society, democratic and participatory institutionalmechanisms are necessary at all levels of government programmes. Theirevolution requires time. India today has 30 States and another 8 UnionTerritories. It has about 600,000 villages and 10,000 urban areas. Thenumber of towns with population of more than 1 million is 23. The task ofdesigning and implementing the development programmes, thus, has alwaysbeen huge.

For administrative purposes States are divided into districts, whichare, then sub-divided into blocks of villages. The village forms the bottomlayer of the rural administration. In the urban areas, municipalities are thelocal government units of administration.

(a) Decentralisation of Governance: The Panchayat Raj System of LocalGovernance

The national Five Year Plan mechanism introduced planning at thestate level which, in turn, encouraged district level planning. Success of thenational plans, clearly, was dependent on the appropriateness of thesedevelopment programmes at the local level. Although local governmentswere involved in the implementation of development programmes, theirinvolvement in the design of programmes was minimal. In recognition ofthis limitation, there has been a move towards decentralisation of developmentplanning and programmes. The large size of the country and slow speed ofcommunication and decision processes required decentralised approach togovernance in issues that required prompt attention at the local level.

The 73rd and 74th amendments to constitution in 1992 provide greaterfinancial powers to the local governments while assigning specificresponsibilities of governance and development work. The amendmentshave given statutory recognition to a three-tier system of governance withPanchayati Raj Institutions (PRIs) at the District (Zilla Parishad),Intermediary (Taluk or Block Panchayats) and Village levels (Gram Sabha/Panchayats). The elected institutions were to have a uniform five year termand in the event of dissolution, elections are to be held within six months. AState Finance Commission is to be appointed by every state government to

decide on revenue sharing with the Panchayati Raj Institutions. DistrictPlanning Committees (DPCs) for formulating plans have to be constitutedin every district with two-third of the membership reserved for electedmembers of the district Panchayats. It is also mandatory for all the stategovernments to enact conformity legislation (Issac and Franke 2000).

A review of the status of the PRIs in terms of the conduct ofPanchayat elections, constitution of District Planning Committees, status inrespect of recommendations of the respective State Finance Commissionson devolution of funds to PRI bodies, etc shows that the performance ofPRIs varies across states. Although the PRIs provide a framework ofdecentralised rural development, the performance so far suggests that theiroperation in most states has not been able to enhance participation andempowerment adequately and effectively.

The National Human Development Report 2001 highlights majorareas of concern in decentralised governance. For example, most stateshave retained adequate financial and administrative powers vis-à-vis PRIs.Implementation is a gradual process of democratic decentralisation. It hasbeen recognised that certain steps need to be taken on a priority basis if thePRIs have to deliver on their promise and potentialities (Planning Commission2001). These include:

• amendment of the constitution to enable states, if they so wish, to abolisheither the district or the block level tier of the Panchayats and retainonly one out of these two in addition to the village level body;

• restrictions needs to be imposed on the devolution of Central FinanceCommission Funds and from other sources to the states unlessadministrative and financial powers are effectively devolved to the PRIs;

• strengthening PRIs with revenue raising powers of their own in orderto reduce their excessive dependence on State and Central Government.PRIs have to be encouraged to mobilize local resources for availingmatching grants from the Central / State governments; and

• building capacities to help the PRIs to manage their responsibilitieseffectively.

The new impetus to decentralised governance in the country isbased on a variety of other experiences. The success of PRIs is critical indealing with local problems by the local people.

(b) Co-operatives in Agriculture: The Case of Dairy SectorThe co-operatives had been given an important role in agriculture

even in the pre-independence period. Co-operatives drew the attention of


the national leaders early in the development efforts, as a form of organisingsmall producers and consumers to derive the benefits of economies of scalein any economic activity. Production, marketing of the produce and purchaseof inputs or consumption items were considered among economic activitiesthat could be performed more efficiently through collective, co-operativeaction. The major area in which co-operatives have continued to play animportant role is agriculture. Co-operatives are prominent in agriculturalproduction, processing, marketing and credit. The government policies havesupported the growth of co-operative sector by providing financial,administrative and technical support. There are a number of product orcommodity-oriented co-operatives in the country such as in sugar, weavers’co-operatives, dairy co-operatives, fishery co-operatives and so on. In themid-1990s, there were a total of 0.47 million co-operatives in the countryoperating in different sectors with more than 220 million members. Co-operatives account for 44 per cent of rural credit flow, 31 per cent of ruralbank deposits and 34 per cent of fertilisers distributed in the country (Singhand Pundir 2000).

The co-operatives have emerged as instruments of rural developmentprimarily because of their organisational structure that provides for activeparticipation of individuals at the local level. The democratic and open-membership features provide greater chances of accountability andparticipation. The success of this type of organisation in a setting whereliteracy was low and the society was often segmented into social classesrequired substantial government interventions and the success has variedacross different regions in the country and across different sectors.

One sector where co-operatives have been important agents ofchange is dairying. Following the success of ‘AMUL’, the ‘Anand’ modelin Gujarat where dairy farmers were organised into village level co-operatives, which, in turn, formed a union of co-operatives at the districtlevel to produce, process and sell milk and milk products, a programme ofdairy development was launched by the government across the country.Named as ‘Operation Flood’, the programme had at its core dairy co-operatives in the villages. The scale of the programme can be gauged fromthe fact that it is now operating in almost all the states with over 100,000 co-operatives and a membership of 11 million. These co-operatives procure17.6 million kg of milk per day and sell 13.4 million litres per day. The co-operatives provide a variety of services to the members such as technicalinputs in the care of dairy animals, transportation, processing and sale oftheir produce. Emergence of dairy co-operatives has provided larger marketopportunities to the rural producers.

Strategies and Programmes for Development 71

(a) Community Participation in Forestry Management: Social Forestryto Joint Forest Management

The forest management in India since the nineteenth century colonialrule has been premised on models of centralised state control. One of theimportant objectives of forest management has been to optimise theproduction of a few valuable timber species for commercial and industrialpurposes. However, the overall implementation of the strategy wasinadequate in ensuring preservation of forest resources. The naturalregeneration of forest suffered serious setback because of large-scale loggingand resulted in its degradation. The over-exploitation not only eroded thenatural resilience of the eco-system but also broke down the indigenousrights and local authority to control access and protect India’s forests. Drivenby growing concerns over timber requirements and rural fuel supplies andon the basis of the recommendations of the National Commission onAgriculture 1976, the government of India initiated a massive social forestryprogramme. The strategy was to raise wood for local needs on commonand private land taking local pressures off natural forests so that they couldbe used for industrial purposes and environmental conservation(Poffenberger et al 1996). Augmenting the supply of small timber used fordomestic and industrial purposes, checking soil erosion, promotion ofconservation of water, provision of job opportunities for rural populationetc., were some of the important objectives of social forestry programme.The programme envisaged raising plantations on all available private andcommunity wastelands, and strips along roads, rails and canals, compoundsof industrial and educational institutions. The social forestry programmewas to be implemented specifically through different plantation models likefarm forestry, community forestry, strip plantations, and rehabilitation ofdegraded forests and development of recreation forests. It gained addedimpetus especially from 1982-83 onwards when afforestation was includedin the new 20-Point Programme (Ninan and Jyothis 2001). Area afforestedwhich was only 52 thousand ha during the First Plan Period, increased toabout 22.7 million ha by 1995-96. Under this programme large number offast growing trees, primarily eucalyptus, was planted in India.

Social forestry, in general, and farm forestry, in particular, althoughsuccessful in increasing the availability of construction poles, pulpwood, andsmall timber, it did not relieve pressures on natural forests. It has beencriticised on a number of grounds. For example, eucalyptus, which waswidely distributed and grown mainly, catered to the needs of paper industryrather than meeting rural needs, the spread of farm forestry affected local


food security in some regions by displacing food crops. The environmentalistscriticised eucalyptus, which was the most popular species, raised under theprogramme on grounds that it led to depletion of groundwater table, loss ofcrop productivity etc., (Ninan and Jyothis, 2001). The major drawback ofsocial forestry programmes has been that they are often not designed torespond to local community interests or institutional capacities. As a result,communities were frequently dissatisfied with placing responsibilities forplantation management with political institutions such as the panchayatorganisations. Moreover, social forestry programmes failed to respond to orresolve conflicts between communities and government over rights to naturalforest lands (Poffenberger et al., 1996). This failure led to the continuedover use and weakened all attempts to stabilise forest use and allow ecologicalregeneration.

It was soon realised that forest conservation policies could not bedetermined in isolation from people and broader patterns of natural resourceuse, and this must be complimented by policies promoting sustainable andequitable development of the natural resource base as a whole. The NationalForest Policy 1988 outlined the scope for people’s participation in forestmanagement and emphasised the need for creating a massive movement ofpeople including the involvement of women for minimising pressure on forestsand ensuring its sustainability.

Joint Forest Management (JFM) in India is an attempt to turn theconcept of peoples’ participation in the management of natural resourcesinto a reality. It is a concept of developing partnerships between fringeforest user groups and the forest departments on the basis of mutual trustand jointly defined roles and responsibilities with regard to forest protectionand development. The programme has been in formal existence since 1988when the state of Orissa passed the first resolution on the subject, followedby West Bengal in 1989. The Government of India’s commitment datesfrom 1990 when it issued policy guidelines for the involvement of villagecommunities and voluntary agencies in the regeneration of degraded forestlands on 1 June 1990 under the JFM (joint forest management) programme(Sunder and Jeffrey 1989). Until then the state forest departments werepre-occupied with large, plantation-oriented social forestry projects and gavelittle attention to the community forest protection groups. As noted earlier,social forestry programmes which are acclaimed for establishing plantationson several million hectares failed to motivate and empower communities tostrengthen their own resource management.

In contrast to the social forestry programme, the JFM strategyrequires the government to empower communities allowing villagers to protect


the natural forests. Table 28 presents the main differences in orientation ofsocial forestry and joint forest management programmes. The policy guidelineof 1990 encourages non-governmental organisations, state forestdepartments, and community groups to collaborate in managing state forestlands. It involves formation of local (village) institutions and empoweringthem to undertake protection activities mostly on state-owned degradedforest land. Moreover, it gives considerable latitude in the types of communitygroups that might be involved, specifying panchayats, co-operatives, andinformal village organisations.

It also places no restriction on membership. The communitymanagement groups are to be involved in the formulation of working plansfor the forest area under their protection. Thus, it represents a process ofdecentralised empowerment benefiting some of India’s most disadvantagedgroups, while possessing the potential to reverse forest degradation(Poffenberger et al, 1996). As per the guidelines of JFM, communities aregiven some rights to timber and non-timber products from jointly managedcommunity lands and a share of the timber harvests yielded by ‘successfulprotection’ (MoEF 1990). Several state governments have also issuednotifications related to this. For example, the notifications of the GujaratState Government issued in 1991 and 1994 for JFM focussed on timberproduction and procedure for final felling and distribution of produce. Sincepeople have interest in fodder and non timber forest products implementationof programmes related to production of NTFPs as per the choice of villagecommunity is also allowed under JFM (Singh 1997). Access to forest landand usufructory benefits are given only to the beneficiaries who get organisedinto a village institution, specifically for forest regeneration and protection.Village level organisations like Forest Protection Committee (FPC) andVillage Forest Committee (VFC) are being empowered and involvedmeaningfully in the decision-making process relating the activities, theirlocation, execution and management of the same (Sharma 1997).

With regard to the constitution of Joint Forest ManagementCommittees, usufructs sharing of benefits, gender issues, protectionmechanisms, roles and responsibilities of the committees etc., different typesof mechanisms have been adopted by different states. Most state policyresolutions suggest that local panchayat institutions monitor the activities ofthe village groups.

For example, the Orissa resolution notes that the forest protectioncommittees (Vana Samrakhshana Samiti) be placed under the supervisionof the ‘Sarpanch of the concerned Gram Panchayat and the Forester as theChairman and Convener of the committee respectively. Voluntary agencies


Table 28. Orientation of Social Forestry and Joint ForestManagement Programmes

Social Forestry Joint Forest Management

Objectives1) Satisfy local needs through fuelwood 4) Meet local needs equitable for

plantations diverse range of forest products2) Supply timber, poles, and pulpwood to through natural regeneration under

industries community participation3) Establish fast-growing tree plantations 5) Extend authority to communities toon 0.4 million hectare of degraded land control forest access and allow localannually management

6) Regenerate 30-50 million hectares ofdegraded under productive forest land

7) Manage biodiversity, ecologicalsustainability and environmental benefits

Who1) Communities through village panchayat 1) Clearly defined and organised formal and

structure (average 500-2000 households) informal community user groups (average2) Private farmers (especially larger farmers 10-100 households) supported by the

with credit access) forest department2) Focus on most forest-dependent women,

tribal and landlessWhere1) Private lands 1) State forest lands (protected and reserve)2) Common property (revenue lands, villagegrazing/panchayat land)How1) Forest department organised 1) Community organised2) Making budget, setting targets 2) Emergence of community concern and3) Establishing nurseries and plantations ability to act4) Providing employment 3) Diagnosing social and ecological

opportunities4) Defining rights and responsibilities

(products, benefit-sharing, protection)5) Microplanning process (access controls,

silvicultural operations to enhance naturalregeneration)

6) Legitimising authority of communitymanagement group.

When1) Based on donor aid and budget process 1) Based on process of community activism2) Renewal based on target achievements and interest

2) Expansion based on spontaneous orencouraged spread to other villages

Source: Poffenberger et al (1996)


and NGOs are associated as interface between State Forest Departmentsand the local village communities for revival, restoration and developmentof degraded forests. A Joint Forest Management Cell in the Ministry in theForest Protection Division monitors the programme.

Although a detailed narration of the merits and demerits of JFM isnot attempted here, it is worthwhile to point out that the Government ofIndia took various steps to strengthen the programme in February 2000.This was after receiving considerable feedback from the States on the variousissues contained in the earlier guidelines of JFM. This included the signingof a memorandum of understanding between the forest department and theJFM committees for ensuring a smooth working relationship between themand for bringing a sense of empowerment and accountability. JFM committeeswere to form the basic Forest Management Units to provide them a feelingof empowerment and enable them to effectively protect and conserve theforest resources. So far, 27 states have issued orders enabling the setting upof a mechanism for public participation in the management of forests. About62,890 JFM committees covering an area of 14.25 m ha of forest land (thatis, roughly about 21 per cent of the total recorded forest area) have beenestablished (X Plan).

As per the recent guidelines, the JFM Committees are to be assignedspecific roles for boundary demarcation, fire prevention and control of grazing,encroachments and illicit felling as well as to ensure sustainable non-destructive harvesting of NTFPs including medicinal plants. A provision toassist the JFM Committees has been made under the Centrally SponsoredPlan Scheme ‘Integrated Forest Protection Scheme’. It stipulates that therelationship between the Panchayats and JFM Committees should be suchthat the JFM Committees take advantage of the administrative and financialposition and organisational capacity of the Panchayats for the managementof the forest resources. The JFM cell has also issued guidelines for capacitybuilding for the management of NTFPs. This includes a plan of action forthe collection, transportation, storage, processing and marketing of NTFPs.The JFM cell also suggests the states to provide legal backup to the JFMcommittees and to extend the programme in good forest areas rather thanconfining to degraded forests. It also emphasises increased participation ofwomen and suggests that at least 50 per cent of the members of the JFMgeneral body and at least 33 per cent of the membership in the Executivecommittee should be filled up by women members. The JFM Cell hasrecommended recognition of Self-Initiated Groups and the integration ofmicro-plan with the working plan apart from conflict resolution, monitoringand evaluation of JFM (MoEF 2000).


(a) Community Participation in Water Resource Management:Irrigation and Drinking Water

Management of water resources is emerging as a major challengein public policy in the country. Participation of the community in managingwater resources is now an essential element of any framework of policy forthe sector. This is true not only in the case of irrigation but also in drinkingwater supply projects. Until recently, local issues relating to the use of waterwere a secondary consideration relative to supply while executing watersupply schemes. Drawing lessons from the failure of such supply drivenapproach, the recent initiatives are beginning to involve the users in themanagement of water resources.

Community Participation in Irrigation ManagementTraditionally, the management of major irrigation systems has been

through a highly centralised bureaucracy with little user participation. Overthe years while new capacities have been created at substantial cost forproviding irrigation, the already created capacity has suffered due to lack ofmaintenance. Moreover, the system has been plagued by the problem ofpoor collection of user charges leading to problems of maintenance. Thefarming communities are also dissatisfied with the services rendered by theirrigation agency because the distribution of water was unpredictable,unreliable and inequitable. Since there was no incentive and motivation scarcewater resources were not utilised efficiently (Joshi and Hooja 2000). Inshort, the irrigation sector has been facing the twin issues of sub-optimalsector planning and financial management, on the one hand and inadequatewater management and maintenance, on the other.

There is a renewed interest in recent years to make communityparticipation in managing water resources to achieve better outcomes. Theidea of community participation in irrigation management is not altogethernew. The Irrigation Enquiry Committee 1938, known as the VisvesvarayaCommittee, had recommended entrusting more number of irrigation to avillage or group of villages if the farmers were willing to take up co-operativeirrigation. In India, there are examples of farmer-managed irrigation systemfrom the kuhls of Himachal to the tanks of South India. The poor performanceof large scale systems managed by the Government agencies, the majorform of irrigation development since the 1950s, has led to a reassessment oftraditional farmer-managed irrigation, and attempts to apply the benefits ofgreater user participation in the Government Managed schemes (Meinzen-Dick 2000).


The developments in irrigation management transfer policies andprogrammes indicate the progress made towards participatory irrigationmanagement in India. It should be noted that the Command Area Development(CAD) programme started in 1974 although identified the involvement offarmers in irrigation management no significant efforts were made in thisarea until mid-1980s. While the VI Plan placed emphasis on the need forfarmer’s participation in the management of irrigation, the VII Plan reiteratedit. Since then Command Area Development Programme has issued a seriesof guidelines, exhortations, and offers to the states to take up aspects oftransfer. The National Water Policy 1987 also stressed the involvement offarmers in various aspects of the management of irrigation system, particularlyin water distribution and collection of water rates. The VIII Five-Year Planendorsed the need to involve users even at the planning stage of the project.It observed that more than setting targets in terms of numbers, potentialetc., the perspective of irrigation water management in future should bebased on the vision of an equitable and sustainable irrigated agriculture withthe farmer being central to all considerations. The existence of differentmodels of water users’ association like Pipe Committees in Andhra Pradesh,the PHAD System Model, Mohini Users’ Co-operative of Gujarat, SinchaiPanchayat in Madhya Pradesh, Water Users Association in Lower BhavaniProject in Tamil Nadu drew attention of the policy makers in the EighthPlan. The Committee on Pricing of Irrigation Water (1992) alsorecommended farmer’s participation in the management of irrigation system.

Considerable breakthrough was achieved during the IX FYP whenthe Planning Commission set up a separate Working Group on ParticipatoryIrrigation Management (PIM). The Working group identified legal,institutional and financial aspects as being crucial to the effectiveimplementation of participatory irrigation management programmes (Rajuet al 2000). The IX FYP laid thrust on the promotion of PIM with fullinvolvement of the water users’ community. The participation of farmers inthe management of irrigation would give responsibility for operation andmaintenance and collection of water rates from the areas under thejurisdiction of the Water Users’ Associations (WUAs) of concernedhydraulic level.

The WUAs may assume various organisational forms and functionsaccording to regional and local needs. For higher levels of large irrigationsystems PIM involves joint partnership between the farmers / WUAs/federations of WUAs and the irrigation agencies / government (Joshi andHooja 2000). The functions of the WUAs include acting as an interfacebetween the farmers and the main system management of the irrigation


project as well as other concerned Government agencies; water distribution;operation and maintenance of the irrigation and drainage system; collectionof water charges and other user charges or special charges that the WUAsmay levy; conflict resolution; etc.

Meinzen-Dick (2000) notes that within India there is a great deal ofvariability in approaches to devolution and participation in irrigation. Thereare pilot or full-scale programmes in 14 states ranging from minimal changesproposed in some states like Haryana to more ambitious programmes inMaharashtra and Gujarat where farmers’ organisations are to take overminor canal commands of about 500 ha with volumetric charges. Stategovernments are also adopting legislative measures for involving farmer’sparticipation in irrigation management. In 1997, Andhra Pradesh enactedtwo important sets of legislation which have become a trend-setter for theremaining states of India. The first legislation, “Andhra Pradesh WaterResources Development Corporation Act 1997 was to consolidate itsthinly spread out efforts to manage all water resources from the resourceconservation and sustainable development perspective. The second legislationis a strategic shift towards participatory irrigation management. The “AndhraPradesh Farmers Management of Irrigation Systems Act 1997” callsfor formation of WUAs throughout the State with a three tier federalstructure. By the end of 1997 the state had created 10292 Water Users’Associations and 172 Distributary Committees for major projects (Raju etal 2000). External donors have also encouraged farmer’s participationthrough a number of projects and programmes.

Despite all these attempts, it has been observed that the progress inachieving farmer’s participation in irrigation management has been slow.As per the estimates, only 804,000 hectares are being managed by WaterUser’s Association (IX Plan).

To accelerate the pace, the Union Government has taken severalinitiatives which aim at increasing the awareness of the issues constrainingthe growth of PIM, focussing on capacity building and providing legislativesupport to the WUA.

Community Participation in Drinking Water ProjectsMost of the present water supply systems whether rural or urban

have been designed and executed by the Department/Boards and providedto the end-users. Water has been regarded as a social good to be providedby the government rather than a scarce economic resource. Progressivechange in this attitude is taking place in the recent years.


The IX Plan observes that the supply of water to the consumersshould normally be based on the principle of effective demand which shouldbroadly correspond to the standard service that the users are willing tomaintain, operate and finance. Since most of the water supply projects aredesigned and executed by the implementing departments, there is anunwillingness of the local government bodies like panchayats to take on theresponsibility for operating and maintaining them. It is expected that theimplementation of a participatory demand-driven approach will ensure thatthe public obtain the level of service they desire and can afford to pay. Therecovery of operation, maintenance and replacement costs will ensure thefinancial viability and sustainability of the schemes. The conditions underwhich people would be willing to maintain and operate water supply schemeshave been identified and include their ownership of assets, if they havethemselves installed the hand pump, if they are trained to do simple repairs,if they have sufficient funds etc. Hence, it is possible to institutionalisecommunity based rural drinking water supply programme if the PanchayatiRaj Institutions/local communities are empowered to generate resourcesand are trained and equipped to plan, implement, use, maintain and replacewater supply schemes themselves in co-ordination with the Governmentagencies/Private Sector/NGOs. Incentives are provided to states forinstitutionalising community participation. Some States like Maharashtra,Karnataka, Mizoram, Goa, Kerala, etc., have already made a beginning inthe concept of community participation in rural water supply programme.

The Accelerated Rural Water Supply Programme (ARWSP)currently implemented through the Rajiv Gandhi National Drinking WaterMission has been in operation since 1972-73. Necessary reforms wereintroduced in 1999 so as to gradually replace the government-oriented,centralised and supply-driven programmes by a people-oriented decentralised,demand-driven and community based one (Government of India 2003). InNovember 2002, the government of India issued a notification on theimplementation of participatory and community led Swjaldhara Rural DrinkingWater Projects. The Swajaldhara project is a demand-driven and communityparticipation approach where the panchayats/ communities are to plan,implement, operate, maintain and manage all drinking water schemes, withpartial capital cost sharing by communities in cash and full ownership ofdrinking water assets with Gram Panchayats (Government of India 2002c).The Beneficiary group under this project should be a registered society.Under the Swjaldhara projects the cost of the project excluding communitycontribution will be fully met by the government. The Swajaldhara Projects


can be implemented at the village / habitation / hamlet levels. Block PanchayatGram Panchayat / Beneficiary Groups are responsible for

• the execution of the sanctioned schemes;• placing the progress of scheme implementation in each Gram Sabha

meeting;• ensuring community participation in scheme activities;• arranging community contribution towards capital cost, in cash;• opening and managing bank accounts for the management of project

funds;• procuring construction materials / goods and selecting contractors

for construction activities;• supervising construction activities;• commissioning and taking over completed water supply works;

and• Collecting funds, and managing O&M of water supply works.

Similar attempts are also made in the case of urban drinking watersupply. Strategies to promote and strengthen decentralisation of productionand distribution systems, privatisation and participation of the community inmanagement and maintenance are expected to induct higher efficiency levels,effective out reach and also contain leakages and wastages. Under thisstrategy, special attention is given to strengthen the centrally sponsoredAccelerated Urban Water Supply Programme (AUWSP).

(a) The Self-Help GroupsThe poverty alleviation programmes floated since independence

were basically top to down in approach. Most of these programmes weredesigned and implemented with little involvement of the people concernedand therefore might have missed some important elements of the solution tothe problem. This turned the focus on decentralisation and enhancedparticipation of the community at large viewed as an alternative paradigmfor development strategy.

Access to credit facilities is an important factor that allows poor totake up economically productive activities and thereby enhance theirincomes. However, providing credit to poor people through formal channelswas beset with several problems including informational problems making itcostly to lend to the poor. In this context, micro-finance programmes haveemerged as an effective instrument of poverty alleviation. For example,over the last two decades, Grameen Bank of Bangladesh, the Self-EmployedWomen’s Association (SEWA) in India and other micro-finance institutions


have devised innovative credit programmes to address market failure anddeliver credit to the poor. Micro finance programmes use peer monitoringand joint liability structure to overcome the screening, monitoring andenforcement problems commonly encountered by formal lending institutions.They deliver small loans to poor borrowers, often women organised intosmall groups, providing more accessible deposit facilities and with muchgreater attention to risk management. Targeted micro-credit programmeshave a strong anti-poverty focus as they aim to increase incomes and smoothconsumption.

Self-Help Groups (SHGs) in India are small informal associationscreated for the purpose of enabling members to reap economic benefit outof mutual help, solidarity and joint responsibility. The benefits includemobilisation of savings and credit facilities and pursuit of group enterpriseactivities. These groups by way of joint liability enable the poor to overcomethe problem of collateral security and thus free them from the clutches ofmoney-lenders. It has been argued that the joint liability not only improvesgroup member’s accessibility to credit but also creates mechanisms likepeer monitoring leading to better loan recoveries. Under SHG system,procedural formalities are minimal and the members can have access toinstitutional credit without collateral offering, full autonomy in the selectionof activity, and the availability of thrift for meeting the urgent needs andflexibility in repayment schedule.

Formation of self-help groups by itself contributes to theempowerment and economic well-being of the poor by improving theircollective bargaining position. The group formation emphasises social capitaland enables the poor to interact with other social groups from a position ofstrength.

Although self-help groups have been in existence for a while, theprocess of organising women into SHGs started during the Ninth Five YearPlan. This was to provide them a permanent forum for articulating theirneeds and contributing their perspectives to development. The SmallIndustries Development Bank of India (SIDBI), National Bank of Agricultureand Rural Development (NABARD), Rashtriya Mahila Kosh (RMK) andmany zilla parishads have emerged as important players in the promotion ofself help groups in India. The SHGs promoted by NABARD for financingthe poor by formal and non-formal institutions, which made a beginning in1991-92, has made significant progress. So far more than 4.6 lakh self-helpgroups covering more than 78 lakh families have been set up earning thedistinction of being the largest micro-credit programme in the world(Government of India 2003).


The SEWA in IndiaThe Self-Employed Women’s Association (SEWA) Bank in

Ahmedabad was initiated in 1972. It was established particularly for womenin the informal sector. In 1973, a SEWA Bank was started to provide standardbanking to poor urban women as well as to link the banking activities withother supportive services through SEWA. By 1976, SEWA Bank was in aposition to begin advancing loans from its own resources. At the end of1980, SEWA Bank had three special loan programmes: the block grantprogramme, a women’s business development loan and a revolving fund toassist home-based workers to replace their old sewing machines. An analysisof the loan records showed that home-based producers received the largestshare of the loans (46 per cent), followed by small scale vendors (33 percent), agricultural workers (10 per cent) and service workers and labourers(2 per cent). The rest were made to women from other categories ofworkers. The loan money is used to invest in small trading as well as forhousehold consumption, emergencies and social obligations.

The SEWA Bank is part of a larger strategy of SEWA to unionisepoor self-employed women workers. SEWA members are typically womenwho have an established trade as such, rather than create new employmentfor them, their union has been involved largely in enhancing the women’sincomes and improving their working conditions in current occupations. Thishas been done by linking them directly to suppliers of raw materials andmarkets, providing reasonably priced credit and organising them into productionunits where women collectively purchase raw materials and produce andsell their goods. In this way, the union addresses the greatest problems ofthe self-employed such as exploitation by merchants and middle men, limitedaccess to credit, supplies of raw materials, markets and low incomes (Thampy2002)

The emergence of non-governmental organisations as the majoragents in the development programmes has been relatively more recent.Whether it is the spread of population or health services, educational servicesor organising the poor for the purpose of marketing of their produce, theNGOs have emerged as important agents of change. Involvement of theNGOs has provided additional support to the development effort, especiallyin designing and implementing development programmes.

2. The Mixed Economy ApproachThe planning process sought to provide a position of dominance to

the public sector in economic development. Initially focussing on basicindustries producing inputs such as steel, aluminium and other metals,


petroleum products and then machinery manufacturing the public sectorenterprises became important in many sectors of the economy. The argumentfor ‘social control’ over production capacity has partly rooted in socialisticideals but also partly due to the need for channelling resources for achievingplan targets. There was a need to step up investment and saving in theeconomy rapidly and the means to achieve this led to governmentinterventions in mobilising resources and investment. In fact the step up insavings and investment over the various plan periods has been significant(Figure 17).

Figure 17. Investment (GDCF) and Saving (GDS) as a Percentageof GDP at Market Prices

Source: RBI (2001)

The role of private sector was visualised in areas where the scaleof operation of a unit was small. This meant agricultural production andtrade and small enterprises continued to operate in the private sector. TheVI FYP aimed at achieving 60 per cent of the new investments of theeconomy in the public sector. The infrastructure sectors such as electricitygeneration, transport and communications were nearly the monopoly of thepublic sector. Public sector also entered industries such as automobiles,textiles, hotels and some of the consumer goods. The private sector inindustry was tightly controlled with respect to the creation of new capacities

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for production. Besides the control over production capacity or expansion,the economy was also subject to a variety of pricing controls. The‘administered prices’ prevailed in sectors such as electricity, steel, petroleumproducts, fertilisers and pharmaceuticals. The banking sector wasnationalised in 1969. It was only agricultural production and retail that werenot directly in the hands of the public sector.

Table 29. Share of Public Sector in GDP (Per cent)

Plan Period Industry (Mining+ Agriculture Services Totalmfg+egw+constr) & Allied

III 1961-66 14.52 2.14 24.38 11.57IV 1969-74 18.95 3.24 32.57 16.42V 1974-78 25.25 3.53 34.38 19.15VI 1980-85 30.93 3.47 37.97 22.92VII 1985-90 35.39 3.30 38.91 25.85VIII 1992-97 33.83 2.78 36.41 25.66IX 1997-00 32.63 2.49 36.12 26.40

1960s 15.07 2.44 25.86 12.451970s 23.12 3.48 34.22 18.581080s 33.16 3.38 38.44 24.381990s 33.65 2.77 36.70 25.97

Source: EPW (2002)

The 1990s saw a reversal of the emphasis on public sector. TheVIII Five Year Plan noted that public sector had failed on efficiency front.The industrial policy of 1991 dismantled many of the controls on the privatesector’s expansion of capacities for production. Foreign investment normswere liberalised. Administered price regime was dismantled. The privatesector was given a fair role in banking and finance.

The growth of public sector until the 1990s was based on severalpremises. The ‘social control’ over means of production was a consistentpolicy with reference to bringing about the ‘socialistic pattern of society’.Secondly, mobilisation of large resources and investing in large projectsquickly was believed to be outside the capability of the private sector. Thepublic sector, however, began to be a burden on the economy’s resources.Instead of contributing to the government’s revenues for implementing variousdevelopment programmes, the public sector began to claim resources formeeting its losses.


Table 30. Gross Capital Formation as a Percentage of GDP atCurrent Prices by Type of Institutions

Five Year Period Public Private HouseholdPlan Sector Corporate Sector

Sector

I 1951-56 3.54 1.34 5.02II 1956-61 6.04 2.46 5.26III 1961-66 7.54 3.36 4.70IV 1969-74 6.72 2.28 7.20V 1974-78 8.65 2.48 7.65VI 1980-85 9.86 4.12 6.82VII 1985-90 10.10 4.32 8.82VIII 1992-97 8.04 7.40 8.00IX 1997-02 6.6 6.2 9.7

1950s 4.38 1.81 5.231960s 6.96 2.77 5.681970s 8.19 2.43 7.661980s 9.98 4.22 7.821990s 7.61 6.48 8.88

Source: EPW (2002)

The 1990s marked a beginning of the end of reliance on publicsector in many areas of the economy. There is now an active programmeof ‘disinvestment’ of government equity in a range of public sectorenterprises.

3. Government Expenditures for DevelopmentA dominant public sector in the production activity, restrictive trade

and investment policies to regulate private sector and foreign commercialactivity required government initiative in most spheres of economic activity.One way to judge the priorities of government initiatives is provided by theshare of different sectors in government expenditure.

We first present the pattern of public sector outlay across the majorsectors of the economy through the various five-year plans starting fromthe V FYP (Table 31). Although the sectoral classification of the expendituresdoes not fully capture the final impact of such expenditures on differentsectors, they provide a first approximation. Also, while the share of a sectorin the total outlay may have declined in some cases, there is generally anincrease in the allocation in each successive Five Year Plan for all thesectors. The pattern does indicate increased spending towards infrastructure


sectors such as energy, transportation and communication over time.There was a decline in the share of agriculture and industry in the

1990s and increase in infrastructure and services.Social sectors including education and health services were a major

concern in the various Five Year Plans. There was a step-up in suchexpenditures in the VI Five-Year Plan. However, since then the increasewas not sustained till the VIII Five-Year Plan. In the VIII and the IX Five-Year Plans, the rates of government spending on social sectors increasedsignificantly (Table 32).

Table 31. Pattern of Capital Formation within Public Sector byType of Industry

Share ( Per Cent) of Industries in Public Sector GCF (atCurrent prices)

FYP Period Agriculture Industry Infrastructure Other Total & Allied (Mining, Mfg, (Power, Trans. Services

Construction Storage &Communication

III 1961-66 10.71 22.28 40.90 26.11 100.00IV 1969-74 12.48 21.94 35.98 29.60 100.00V 1974-78 11.95 29.06 32.59 26.40 100.00VI 1980-85 12.19 27.81 35.39 24.62 100.00VII 1985-90 8.66 27.85 40.11 23.38 100.00VIII 1992-97 7.06 23.17 43.88 25.89 100.00IX 1997-99 6.81 20.14 44.00 29.06 100.00

1960s 11.24 24.67 37.06 27.04 100.001970s 12.52 25.84 34.08 27.56 100.001980s 10.43 27.83 37.75 24.00 100.001990s 6.90 23.18 43.84 26.08 100.00

Source: EPW (2002)

4. Regulatory Mechanisms

Constitutional provisions and legal requirements have been used toachieve various standards and norms needed for development programmes.For instance, a variety of environmental regulations have now been enactedto achieve the goals of environment protection and preservation. NationalPolicies in the areas of agriculture, forest, health, education, energy providefor regulatory mechanisms to enforce the policies. India is also a signatory


Table 32. Government Expenditure in the Major Sectors as PerCent of GDP: Centre and States Combined

FYP Period Agriculture Infrastructure Social Others Total& Allied Sectors Expenditure

V 1974-78 0.18 1.48 3.93 14.62 20.21VI 1980-85 0.31 2.20 4.90 17.04 24.45VII 1985-90 0.39 2.30 5.65 19.36 27.70VIII 1992-97 0.37 1.87 5.03 17.59 24.86IX 1997-02 0.40 1.98 5.58 18.22 26.18

1970s(from 1974-75) 0.19 1.63 4.11 15.16 21.091980s 0.35 2.25 5.28 18.20 26.081990s 0.37 1.95 5.17 17.67 25.15


to many of the international multi-lateral treaties in the matters relating toenvironment, health, investment, trade and finance. The domestic laws andregulations have been framed to comply with the international agreements.We discuss briefly some of the national policies and regulations that have abearing on sustainable development.

(a). Environmental Acts/LegislationThe major legislative action in the area of environmental protection

came into force with the enactment of the Water (Prevention and Controlof Pollution) Act of 1974. This legislation is comprehensive in its coverageof water pollution. The Central and State Pollution Control Boards wereestablished under this Act. These boards prescribe standards for thedischarge of effluent or the quality of the receiving waters. There are threetypes of effluent standards such as concentration based, waste-watergenerated per unit of output or input based and load based standards. TheAct prohibits disposal of polluting matter in streams, wells and sewers or onland in excess of the standards established by the state boards. It stipulatesthat consent must be obtained from the state board before taking steps toestablish any industry, operation or process, any treatment and disposalsystemor any extension or addition to such a system which might result inthe discharge of sewage or trade effluent into a stream, well or sewer oronto land (Rosencranz et al 1991).

The 42nd Amendment of the Indian Constitution in 1977 enjoinedboth the state and the citizen to protect and improve the environment and


safeguard forests and wildlife.Legislations relating to forests (Forest Conservation Act 1980),

air quality [Air (Prevention and Control of Pollution) Act 1981] werefollowed by the comprehensive Environment Protection Act (EPA) of 1986.This Act provides a comprehensive mandate to the state to put in placemeasures to protect the environment.

The National Forest Policy of 1988 stipulated that 33 per cent ofthe land area of the country should be under forest cover. To enablepreservation of forests and increase in the forest cover, the policy stressesthe involvement of the communities and those who derive their livelihoodfrom forests. Involvement of women in forestry programmes was also astrategic direction indicated by the Forest Policy of 1988.

There were also other significant developments with respect to theprotection of environment in India. With the 73rd Amendment of theConstitution made in 1992, Panchayats are bestowed with the responsibilitiesin the area of soil conservation, water management, watershed development,social and farm forestry, drinking water, fuel and fodder, non-conventionalenergy sources and maintenance of community assets (TERI 1999). TheNational Water Policy was adopted in 1987 to ensure optimum thoughenvironmentally sound utilisation of water resources and deal with the highpollution levels (TERI 2000). Another significant development was thetightening up of laws to deal with the risk involved while handling hazardoussubstances. The Hazardous Waste (Management and Handling) Rules 1989,the Manufacture, Storage and Import of Hazardous Chemical Rules 1989and the Public Liability Act 1991 were passed in this respect.

The Government of India has also incorporated the spirit of Agenda21 of the Earth Summit in Rio de Janeiro in June 1992 which aims atintegrating environmental imperatives with developmental aspiration in theform of two policy statements. They are the policy statements pertaining toAbatement of Pollution and National Conservation Strategy. The formerdraws attention to the changed stance within the environment sector suchthat the development and promotion of voluntary initiatives for protectionand improvement of the environment through the use of incentives issimultaneous to development of the regulatory and legislative framework.These incentives may be fiscal or financial with the intention of encouragingcleaner technologies and production practices and deterring the use ofharmful and polluting practices (Kuik et al 1997). The Policy Statement forthe Abatement of Pollution recommends the polluter pays principle,involvement of public in decision-making and new approaches for considering


the market choices ‘to give industries and consumers clear signals aboutthe cost of using environmental and natural resources’ (Sankar 2001). Themeasures for abatement of pollution include strengthening and extendingthe activities of the Central Pollution Control Board and insisting the pollutingunits to submit environment statement. The submission of environmentstatement is expected to enable the units to take a comprehensive look attheir industrial operations and facilitate an understanding of material flowsand focus on those areas where waste reduction and consequently savingof input cost is possible, etc.

IX FYP promoted the development and adoption of clean technologyincluding waste re-use and recycling. It proposed strengtheningenvironmental database. Development of standards, pollution monitoringand review were to be carried out as a continuous process. Economicinstruments were also to be used with regulatory measures for pollutionabatement. This includes enhancement of cess rates on water consumption,duty concessions on import of certain pollution control equipment, accelerateddepreciation on pollution abatement equipment.

The National Conservation Strategy and Policy Statement onEnvironment and Development which was brought out in 1992 laid guidelinesfor integrating environmental considerations into India’s process ofdevelopment. According to the policy statement, carrying out ofenvironmental impact assessment of all development projects right fromplanning stage was made mandatory. Projects above certain size and incertain ecologically sensitive areas were to get prior environmental clearance,environmental safeguards, and protection measures were to be incorporatedin policies and in the implementation of developmental projects, createenvironmental consciousness through education and mass awareness, etc.

The National Conservation Strategy proposed surveys by theBotanical Survey of India (BSI) and Zoological Survey of India (ZSI) aimingat the conservation of endangered species. Biodiversity Conservationschemes were initiated during 1991-92 for ensuring proper co-ordinationamong various agencies concerned with the issues relating to conservationof biological diversity and to review, monitor and evolve adequate policyinstruments for the same. Other ongoing programmes in the context ofenvironmental protection are the National River Conservation Programme,afforestation and eco-development programmes, Wasteland Developmentprogramme. Under the IX FYP, the programmes are classified as issuespecific, area and sector specific. Issue specific programmes include themobilisation and involvement of people in environmental protection,


strengthening of the surveillance and monitoring system, preparing reportson the state of environment, integrating environmental concerns with decisionmaking and natural resource accounting. Among the area specificprogrammes are National River Conservation Programme (NRCP), NationalLake Conservation Programme, Taj Trapezium, Himalayan Region, Islandand emphasis on Coastal Zone Regulation. Sector specific programmesinclude, the strengthening of the Central Pollution Control Board, progressof Industrial Pollution Control and Prevention Projects with externalassistance, setting up of the Common Effluent Treatment Plants (CETP),schemes for promoting the adoption of clean technologies by small scaleindustries, preparation of environmental statistics and mapping. Other sectorspecific programmes are environmental impact assessment and developmentand promotion of clean technologies, conservation and survey, conservationof biosphere reserve, mangroves, wetlands and biodiversity along withencouraging research, environmental training and information. TheEnvironment Action Programme 1993 was launched with the objective toprepare a ‘blueprint’ for integrating environmental concerns into thedevelopment process. The intention is to formulate a blueprint that is dynamicand holistic and promote a decentralised system of environmentalmanagement.

(b) International Environmental Conventions and IndiaIndia has favoured the policy of multi-lateral approaches issues of

global concern. In the area of environmental protection also India has takenan active role in synergising India’s position with the global agreements.The international environmental issues can be classified under four majorareas such as depletion of ozone layer, green house gases, loss of biodiversityand trade related issues. The Montreal Protocol on substances that depletethe ozone layer was signed in 1985 and came into force in January 1987.The aim of the Protocol is to protect the stratospheric ozone layer above theearth. India acceded to the Protocol in 1992. In 1993, India prepared adetailed country programme to phase our ozone depleting substances (ODS)in accordance with the national industrial development strategy. Efforts toaddress the issues relating to climate change at the international level beganduring the mid-eighties. The UNEP and the World Meteorological Officeestablished the Intergovernmental Panel on Climate Change (IPCC) in 1988.The objective of the Framework Convention on Climate Change (FCCC)was to achieve stabilisation of green house gases (GHG) concentrations inthe atmosphere at safe level. In 1997, parties to the FCCC made progressin forging an international climate policy regime under Kyoto Protocol.


The Convention on Biological Diversity was signed at the time ofRio Conference in 1992. India with its phyto-geographical and agro-ecologicaldiversity is a rich depository of biological resources. It is one of the twelvemega biodiversity centres in the world. However, India’s biodiversity is underthreat from various sources. India is a signatory to Convention on BiologicalDiversity (CBD) which came into force in December 1993. Besides, theMoEF has also initiated a project under the GEF (Global Environment Facility)programme called as National Biodiversity Strategy and Action Plan(NBSAP).

India is also signatory to the 1989 Basel Convention on the Controlof Transboundary Movement of Hazardous Wastes and their Disposal(Srivastava, 1999). The Basel Convention requires countries to ensure thathazardous wastes and hazardous recyclable materials are managed in anenvironmentally sound manner. Other international conventions in whichIndia is a part include the Ramsar Convention for the Conservation of Wetlands of International Importance, Convention for Combating Dessertificationand the International Trade in Endangered Species of Wild Flora and Fauna.

(c) Regulatory Concerns in the Use of Natural Resources andPreservation of Environment

Land Degradation and Soil LossSoil erosion has been identified as the most serious cause of land

degradation. It is estimated that India loses about 5,310 million tonnes of topsoil annually and that around 130 million hectares of land (45 per cent of thegeographic area) is affected by serious soil erosion (Ninth Five Year Plan).It is also noted that agricultural practices like increased use of nitrogenousfertilisers affect the water quality indirectly. Through leaching, nitrate findsits way into groundwater, which is a threat to potable water quality. Whilethe maximum permissible limit of nitrate content as laid down by WHO is100 mg/litre, studies have shown that in some parts of India the nitratecontent of dug wells was higher than the permissible limits. Not only thatadverse impacts of pesticide use was also observed in the water (TERI2000). In India, 133 pesticides have been registered for regular use, ofwhich 34 are either banned or restricted in other countries (CPCB 1994).

Forests, Wildlife and BiodiversityForests play an important role in environmental and economic

stability. Although the National Forest Policies of 1988 stipulates that 33 percent of the land of India should be under forest, India’s total forest area isabout 23.28 per cent of the total geographical area. It has been reported


that the quality of forests (crown density) has declined over the decadesthough the area under forests has remained practically the same. The ForestSurvey of India (1999) reports that only about 11.48 per cent of India’s totalgeographical area is under dense forest (crown density of 40 per cent ormore), 7.76 per cent is open forest (crown density between 10 and 40 percent) and roughly about 0.15 per cent constitutes mangroves. The forestsare major sources of supply of timber, fuel wood, fodder and a wide rangeof non-wood products, is a natural habitat for biodiversity and repository ofgenetic wealth, play an integral part of the watershed to regulate the waterregime, conserve soil and control floods, carbon sequestration and carbonsink. However, it has been noted that the forest resources in India are undertremendous pressure. Intensified shifting cultivation, indiscriminate removalof timber, fuel wood, fodders and other forest produce, forest fire andencroachment have led to degradation and deforestation. It has been notedthat the forests meet nearly 40 per cent of the country’s energy needs and30 per cent of fodder needs. It is estimated that about 270 mt of fuel wood,280 mt of fodder, over 12 million m3 (cubic meter) of timer and countlessnon-wood forest products are removed from forests annually. Efforts atparticipatory forest management were also taken with the introduction ofJoint Forest Management (JFM) since early 1990s. So far, 27 states haveissued orders enabling the setting up of a mechanism for public participationin the management of forests, and 62,890 JFM committees have beenestablished (Planning Commission 2003).

Water QualityThe important substances which pollute water have been identified

as traditional organic waste, waste generated from industrial activity,chemical agents for fertilisers and pesticides for crop protection and siltfrom catchments. The types and sources of water pollution include bothpoint and non-point sources. A survey of 241 Class II towns in 17 states inIndia undertaken by the CPCB indicates that, on an average, 90 per cent ofthe water supplied is polluted and that only 1.6 of the total polluted wastewater gets treated (CPCB 1990). Drinking water standards for India wereset up by the Indian Council of Medical Research and are similar to theWorld Health Organisation Drinking standards. The Central Pollution Controlclassifies the surface water into five categories such as A, B,C, D, and E indecreasing order of quality. Discharge of industrial effluents are regulatedthrough Indian Standards Codes such as IS:2490 (1974) for discharges intoinland surface waters, IS:3306 (1974) and IS:3307 (1974) for discharges onland for irrigation and so on (TERI 2000; IX FYP). The Central Pollution


Control Board has been regularly monitoring the water quality in all themajor rivers at 402 locations under the MINARS (Monitoring Indian NationalAquatic Resources Systems), 51 locations under global environmentalmonitoring systems, 27 locations under Ganga Action Plan and 134 locationsfor groundwater. It has been observed that the water quality of almost allmajor rivers in India is increasingly deteriorating.

Air QualityUnder the Air (Prevention and Control of Pollution) Act 1981,

India has set ambient air quality standards. The standards, which werebased on eight-hourly average time, were revised to 24-hourly standards in1994. The standards are set for sulphur dioxide, oxides of nitrogen, suspendedparticulate matter, respirable particulate matter, lead, carbon monoxide andammonia. It has been noted that six of the largest cities in India have severeair pollution. Annual average levels of total suspended particulate matter(SPM) in these cities are at least three times the WHO standard. TheCPCB has been regularly monitoring the ambient air quality at 290 locationsspread over 92 cities and towns. It is also observed that more than 90 percent of the national monitoring stations record particulate concentrationsexceeding 75 µg/m3, the recommended WHO standard (TERI 2000).

Noise that has been previously considered only as a nuisance isnow considered as a pollutant. The CPCB notified the ambient noisestandards in 1987 under the Air (Prevention and Control of Pollution)Act 1981. However, studies of noise levels conducted in a few major citiesseem to indicate that these levels are barely within limits in industrial zonesbut due to vehicular noise, the pollution limits in residential, silence, andcommercial zones are being increasingly challenged everyday (MoEF 1999cited in TERI 2000).

Industrial EmissionEmissions from industries are of two forms-particulate emissions

such as SPM and gaseous emissions such as sulphur dioxide, oxides ofnitrogen and carbon monoxide. Heavily polluting industries are included underthe 17 categories of highly polluting industries for the purpose of monitoringand regulating pollution. There were 1,551 industrial units in the countryfalling under the 17 categories of highly-polluting industries as on 31 March1996 (TERI 2000).

Vehicular EmissionsThe share of vehicular pollution in urban areas is reaching alarming

proportions and emission standards were first set in 1986. These were later


revised in 1987 and 1989. Petrol-driven vehicles are a major source ofcarbon monoxide emissions contributing over 85 per cent; diesel vehiclescontribute over 90 per cent of emissions of oxides of nitrogen. The standardsfor petrol-driven vehicles for carbon monoxide are 3 per cent for two andthree wheelers and 4.5 for four wheelers. The standards for diesel-drivenvehicles specify limits for smoke as 65 Hatridge units (TERI 2000). Theseare emission standards with reference to volume of air.

Indoor PollutionIndoor air pollution is a critical issue and the pollutants of concern

are suspended particulate matter and carbon monoxide. Studies related toindoor pollution show that concentration of SPM during a cooking sessionvaries from 3-6 mg/m3 and that of carbon monoxide from 5-50 parts permillion. Women in rural households have to cope with a daily pollution loadequivalent to spending 1 hour in a room that has 40 mg of SPM for everycubic metre of air as against a value of 1.2-3.0 mg recommended by WHO(TERI 2000).

PowerThermal power constitutes about 72 per cent of the total installed

power generation. Increasing reliance on thermal power leads to manyenvironmental problems since India’s coal is very high in ash content and itsdisposal poses a major problem. The Ministry of Environment and Forest ina notification issued in 1997 made it imperative for thermal power plants tobe located beyond 1,000 km from coal pit head or in urban sensitive orcritically polluted areas to use coal with an ash content lower than 34 percent.

Solid WasteThe amount of municipal solid waste (MSW) generated in most

Indian cities is increasing rapidly. The per capita quantity increases with thesize of the city and varies between 0.38 and 0.65 kgs per day. In metropolitancities, values up to 0.5 kg per day have been recorded. Per-capita wastegeneration is also increasing over the years at the rate of 1.33 per cent(CPCB 1999). It is also estimated that the hazardous waste generatedfrom industrial sector is of the order of 7.2 million tones annually, of whichapproximately about 1.4 million tones is recyclable waste, 0.1 million tonneis incinerable and 5.2 million tones is destined for disposal at landfills (MoEF2000). The industries that generate huge quantities of waste are thermalpower stations and iron and steel plants. On the whole, it is seen thatenvironmental awareness and the measures to protect environment havebeen increasing in India over the years.


CHAPTER III

DEVELOPMENT AND SUSTAINABILITY PERSPECTIVES

1. Agriculture and Sustainable DevelopmentAgricultural development has been an important goal of economic

policies in India given the importance of the sector in generating income,providing employment and promoting food security for a populous nation.The policies for the sector have dealt with the whole range of production,marketing, prices and technology. Low productivity either in terms of outputper unit of land or labour has been the focus of many of the agriculturaldevelopment programmes. In fact, raising agricultural productivity has beena goal of policies for its poverty alleviating impact. In the first two decadesof planning, expansion of crop area was possible to increase crop output.However, as limits to further expansion of crop area were experienced,productivity improvements to raise output became imperative. Table 33summarises the growth experience of different sub-sectors in agricultureand allied sectors during the period since 1950-51.

Table 33. Growth Rates of Agricultural Production:Per Cent Per Year

Year Crops Rice Wheat Other Pulses All Food Non-Food Milk Eggs Meat

Cereals Grains Grains

1952-63 3.65 4.15 4.99 3.68 2.41 3.70 3.50 1.21 3.70 1.58

1962-73 2.30 1.87 8.28 0.71 -0.89 2.44 2.01 1.57 3.47 -0.24

1972-83 2.50 2.16 4.50 1.23 0.54 2.39 2.70 4.85 6.66 2.59

1982-93 3.32 3.70 3.70 1.68 1.72 3.14 3.71 5.18 7.07 5.66

1992-02 2.89 3.02 3.67 1.97 0.66 2.53 3.43 3.78 13.97 -0.78

Note: Crop output growth rates are based on indices of output between the 3-year averagesof end points of the period. In the case of non-crop items the output is the value of outputin constant prices.Source: Chandhok (1990b); Government of India (2003) and EPW (2002)

In order to highlight the relative importance of contributions fromproductivity improvement to output growth, the crop output changes aredecomposed into contributions from crop area and crop yield. The increasingsignificance of productivity improvements to the growth of crop output,emerging from this decomposition analysis is illustrated in Figure 18. Thepercentage changes in crop area and yield per hectare during the selected10-year period are presented for food grain, non-food grain and all crops

combined. In the case of food grains, area increase was significant only inthe 1950s. In the 1980s and 1990s, contribution of area to output changeswas actually negative. The declining crop area under food grains wasoffset by the rise in crops area under non-food grain crops. Thus, at the allcrops level, both area and yield contributed by nearly the same proportion tooutput growth in the 1990s. An important point that emerges from thepattern of crop yield and area changes in Figure 18 is that in the 1980s,nearly all the increase in crop output was from productivity improvementwhereas productivity improvement dropped dramatically in the 1990s.

Figure 18. Decomposition of Crop Output Growth: Per CentChange in Crop Output and Area

Source: Chandhok (1990b) and Reserve Bank of India (2001) and EPW(2002)

In the 1970s and 1980s, the ‘green revolution’ led to increase incrop yields through application of a package of inputs of new seeds of highyielding crop varieties, irrigation and chemical fertilisers. The improvementin crop yields was dramatic in the case of wheat. Market support in theform of minimum support prices, procurement of foodgrain by the governmentand the technology-push led to increase in foodgrain output. Expansion ofirrigation, area under high yielding varieties and market support led to thegrowth of output of other crops also. India has achieved ‘self-sufficiency’in food through agricultural growth even as it has crossed the 1 billionpopulation mark. Agricultural commodities account for 15 per cent of thetotal merchandise exports from the country.

The dramatic changes in the use of inputs are illustrated in Figures19 and 20. From insignificant levels of mechanisation in the 1950s and

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Development and Sustainability Perspectives 97

1960s, use of tractors and irrigation pump sets has grown considerably bythe mid-1990s (Figure 19).

Figure 19. Growth of Machinery Use in Agriculture: Tractors andPumpsets

Source: Government of India (2001c)

Besides the marketing support public investment in irrigationfacilities, credit subsidy and other input subsidies were important componentsof agricultural policies that promoted green revolution. Use of fertiliserconsumption increased as irrigated area and area under high yielding varietiesrose through the 1970s (Figure 20). There has been a debate over the roleof price and non-price factors in promoting the use of modern inputs inIndian agriculture. Increase in irrigated area, the spread of use of highyielding varieties of crops and the expansion of supply networks for inputswere among the major non-price factors that helped raise the use of chemicalfertilisers. But, as the experience in the mid-1970s early 1990s shows (Figure20), fertiliser consumption per hectare saw a decline or stagnation in aperiod when input prices experienced sharp rise.

The reliance on a package of yield enhancing chemical inputs willhave its impact on water and land resources unless such usage is balancedwith the need for preserving the quality of resources and also the givenstock of natural resources. There is rising evidence of over exploitation ofground water resources and also use of chemical pesticides at excessivelevels.

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Figure 20. Growth in Irrigation, Fertiliser and HYV Seeds

Note: GIA/GCA = ratio of gross irrigated area to gross cropped area, HYA/GCA = ratio ofarea under high yielding varieties of crops to gross cropped area, and the fertiliser consumptionis in terms of major nutrients (N, P and K) per hectare of gross cropped area.Source: Government of India (2001b)

The achievements in terms of output growth, thus, have not comewithout some concerns regarding sustainability of growth. Some of theeconomic issues are:

- budgetary and other subsidies for agriculture are contributing tofiscal imbalances and may in fact be adversely affecting publicinvestment in the sector. In other words, strategies that encouragethe use of subsidised inputs are becoming unsustainable. There is,therefore, a need to evolve approaches that can provide incentivesto improve productivity on a sustainable basis. Adequate usercharges or prices for inputs such as irrigation water, electricity andfertilisers will make the provision of these inputs sustainable and atthe same time will ensure better quality of supplies to the users;

- improving productivity and efficiency of inputs on a constant basiswill be essential for competing in a globalising economy. Toconstantly improve productivity, bringing new technologies not onlyin production but in harvesting, processing and marketing would


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be necessary. Reducing post-harvest losses in output, improvingpackaging and processing for new markets require privateinvestment. Partnerships between farmers and the corporate sectorto realize investments for achieving growth for Indian agriculturaloutput in global markets will be needed;

- a related issue is the viability of small-producer agriculture in thecontext of investments needed for greater productivity. Again, theneed for organisational structures that provide economically viablesupport for efficiency improvements of the small farms is obvious;The issues relating to sustainable use of natural resources are:

- the need to preserve and enhance the land resources. Degradationof land quality that is taking place either due to irrigation that leadsto water-logging, salinity and alkalinity, practices that lead to soilerosion.

- the need to use water resources more efficiently and judiciously.In many regions, the groundwater table is declining alarmingly aslarger proportion of crop land is brought under irrigation. Withoutadequate attention to preserving water resources, damage may bedone to further output by this excessive exploitation of waterresources;

- impact of intensive agricultural production on environment,particularly in terms of the quality of water resources. Water run-off from farm land takes along chemical fertiliser residues and otherchemicals if used in farming, through drainage systems to streams,rivers or other water bodies. Adequate checks to minimise thepollution of water bodies farm lands would be important to improvewater quality for other uses; and

- use of chemical pesticides, if indiscriminate, can affect other formsof life adversely. Even the farm output may contain residues thatare harmful to health. Thus, while protection from pests is necessary,the use of chemicals needs to be judicious.

These issues relating to sustainable development of agriculture havereceived attention in government policies. A recognition of the issues isevident in the goal of National Agricultural Policy of 2000 which seeks toachieve an output growth in excess of 4 per cent per year which is sustainabletechnologically, environmentally and economically. The growth should beefficient in the use of resources while conserving soil, water and biodiversity.It should be demand-driven, cater to domestic market and maximise benefitsfrom export of agricultural products in the face of the challenges arising


from economic liberalisation and globalisation. It is necessary for the policiesto enable quick application of modern communication, financial andinformation technology innovations to agriculture at the farm level to provideadditional sources of efficiency to the sector. Without greater efficiencythe small farm agriculture will find it increasingly difficult to compete in theglobal markets.

2. IndustryIndustrial growth provides diversification of activities in a developing

economy. As a source of new employment opportunities, improvingproductivity in traditional agrarian sector of the economy and providinglinkages to the global markets, industrial development is a part of the paradigmof economic growth and development. In the Indian planning process,industry was accorded an important role in leading India to becoming amodern economy. Industrialisation was sought to be achieved with theheavy industries and capital goods industries being given precedence overother industries in the FYPs. Public sector was given a prominent role inindustrialisation. The industrialisation strategy also involved import–substitution. Thus, the policies sought to achieve a particular type of industrialdevelopment at a viable pace. The limitations of the strategy became evidentby the 1980s. The pace of industrial growth was slow in comparison to thefast growing developing economies of East and South-East Asia. Theconsumer was deprived of quality industrial output and the price was highfor the produce.

Beginning slowly in the mid-1980s, vast changes in industrial policywere brought about in the 1990s. The New Industrial Policy of 1991 heraldeda new policy regime for Indian industry. Abolishing the quantitativerestrictions on investments industry, the new policies sought to bring aboutnew dynamism into industrial development. Public sector monopolies gaveway to competitive environment. Liberalisation of trade barriers brought inglobal competition. The change in policy regime has been a part of theoverall process of economic reforms India which began in the early 1990s.

The deceleration in industrial output growth is evident when wecompare the annual average rates of growth during the period of the 1980sand the period from 1992-93 to 1999-2000 (Table 34). The period of 1990s(1992-2000) was a transition from a regime of protected and ‘controlled’industrial policies to one of more competition. The transition requiredadjustments in capacities of production, technology and operations. A keychange that is discernible from Table 34 is the sharp decline in the outputgrowth of capital goods. Although consumer durables also grew at a slower


pace, the 1990s growth still remained at close to 10 per cent per year. Thecapital goods sector saw greater competition from imports and it alsowitnessed slower investment spending in the industrial sector. The consumergoods, on the other hand, saw capacity restrictions being removed whileprotection from imports remained fairly high.

Table 34. Rate of Growth (%) of Industrial Output (Index ofIndustrial Production)

Item 1980-90 1992-00

General 7.80 6.16Mining & quarrying 8.77 3.38Manufacturing 7.46 6.41Electricity 9.15 6.70Use- based classificationBasic goods 7.99 6.05Intermediate goods 6.05 7.26Capital goods 10.96 5.32Consumer durables 14.23 9.60Consumer non-durables 5.44 5.10

Source: Chandhok (1990b); RBI (2001)

The motivation for initiating and continuing with the reforms is tomake faster economic growth sustainable. In the context of industrial growthalso, the reforms have sought to bring about a sustainable growth in thesector. While the process of restructuring of industry in response to thereforms in policy continues, we draw attention to one of the distinct featuresof development policies relating to industry that have a relevance tosustainability of the growth process.

(a) The Small Scale Industries (SSIs)The small-scale industries, broadly defined, have been given a

distinctive role in India’s industrial policies. The Industrial Policy Resolution(1956), one of the early policy statements of independent India, noted thekey benefits of small scale industries: (1) employment generation, (2) greaterpossibilities of wider regional spread of industries and (3) greater flexibilityor adaptability in response to market fluctuations.

There are alternative definitions of small-scale industries adoptedfor different purposes. For instance, there are the village or traditionalindustries, which include handlooms, handicrafts, sericulture and coir. Then


there are the modern SSIs, which cover various engineering manufacturesand power looms. For the purpose of providing fiscal and other benefitsunder the government policies, SSIs are defined based on the volume oftheir fixed assets, although the cut-off value has varied over time generallymoving up to provide some benefits of greater scale economies. Finally, the‘unregistered’ manufacturing units are taken to reflect the ‘small scaleindustries’ in the economy although this definition is based on the number ofemployees per establishment. Taking the last of the definitions to beginwith, the unorganised sector contributes a significant share of the industrialsector, particularly manufacturing. Although the share is declining, it is stillas much as 30 per cent of the manufacturing value added (Figure 21).

Figure 21. Growth in Manufacturing Value Added: Per CentAnnual Averages During the FYPs

Source: EPW (2002)

The government policies have attempted to encourage the smallscale industries by providing a variety of benefits. The SSIs have enjoyedfiscal benefits in terms of lower taxes than the larger units, they also havereceived credit from the banking and financial institutions at a lower rate ofinterest than available to industry, in general. The government has alsosought to provide infrastructure facilities such as developing the roads andcommunication facilities, power and transport to the clusters of SSIs. Thegovernment policies have also provided support for technology upgradationincluding Research and Development activities.

An important policy that promoted SSIs was that of productreservation. There has now been a move to steer away from such policygiven the liberalised trade regime where small scale industry now must


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compete with small or large import suppliers. The significance of SSIs inIndian industry is evident from its contribution of 40 per cent of value addedin manufacturing. It is estimated to provide 35 per cent of India’s exports ofmanufactured products. It also provides employment to 20 million people.

The presence of unorganised sector in different segments ofindustries is illustrated in Figure 22. The ‘unregistered’4 sector accountedfor over 80 per cent of the value added in two sectors, viz., wood, furnitureand products, and ‘other’ repairs (repairs other than repairs of capital goods),in both 1990-91 and 2000-01. The shares of unregistered sector rangedbetween 50 and 70 per cent of the value added in the case of metal products,‘other manufacturing’, leather and fur products, and beverages, tobaccoand tobacco products in both the reference years noted above. It is therelatively less capital intensive sectors that attract smaller enterprises.Registered sector dominates with more than a share of 70 per cent of valueadded in the case of manufacture of machinery, rubber and petroleumproducts, chemicals, transport equipment and basic metals.

The relative importance of different segments of manufacturing tounorganised sector is provided in Figure 23. Textile related (textiles andproducts) industries account for the largest proportion of value added withinthe unregistered manufacturing. Four sub-sectors of manufacturing(inclusive of repairs services) accounted for about 50 per cent of output ofunregistered manufacturing. There has been some rise in the share ofsome sub-sectors such as ‘other manufacturing’ and ‘metal products’ withinunregistered sector in 2000-01 as compared to the structure in 1990-91.The sharp decline in the share is in beverages, tobacco and tobacco products;wood, furniture and products; and rubber, petroleum and products.

The new industrial policy regime that has reduced protection fromimports through lowering trade barriers and reduced protection to SSIs fromcompetition from large scale producers, has had an adverse impact on thissector. There is, however, a growing recognition that SSIs would have togrow based on their own intrinsic strengths such as flexibility in location andquick adaptability to changing market conditions. Product specific policysupport to SSIs is unlikely to benefit the economy in an era of liberalisedtrade and industrial policies. It is the complementarity of large, medium andsmall industries that is likely to provide greater opportunities for the SSIs inthe future.


Figure 22. Share (%) of Unregistered Manufacturing in SectoralGDP

Source: EPW (2002)

The government policies now actively support adoption of pollutioncontrol measures by the SSIs. The government now reimburses the expensesincurred for obtaining ISO 4001 Environment Standard. This is an expansionof the scheme for technology upgradation where expenses incurred forachieving ISO 9000 standard are reimbursed. The IX Five Year Plan providedfocus on industries based on fruits and vegetable processing, livestockproducts and fisheries within the ‘food processing industry’ as potentialareas for the expansion of SSIs.

(b) Industrial Pollution ControlWith the expansion of industry in the economy, the need for adequate

institutional mechanisms to monitor and regulate the environmental impactof industrial activity has been recognised. A beginning for legislative activitiesand institutional building for environmental regulation has been made in thewake of the Stockholm Conference in 1972. The enactment of Water


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Figure 23. Distribution (%) of GDP from UnregisteredManufacturing across Sectors

Source: EPW (2002)

(Prevention and Control of Pollution) Act of 1974 and Air (Preventionand Control of Pollution) Act of 1981 were the initial measures adoptedto control pollution. The Bhopal Gas Tragedy of 1984 has been a turningpoint in the evolution of environment policy in India and led to further spateof legislative activity and tightening up of environmental law in India. Sincethe Bhopal Gas Tragedy involved the handling of risk from a hazardoussubstance, the Hazardous Waste (Management and Handling) Rules 1989,the Manufacture, Storage and Import of Hazardous Chemical Rules 1989;and the Public Liability Insurance Act 1991, were passed to tighten upthe law in this respect. The Policy Statement on Abatement of Pollution1992 further emphasised the integration of environmental considerationsinto decision-making at all levels and lists different areas where pollutionproblem is grave and that needs to be tackled on a priority basis.

Presently, the Ministry of Environment and Forests, which is theapex policy making body in the field of environment, acts through the central


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and state pollution control boards for implementing pollution control laws.The important regulatory instruments used in pollution control or preventionmechanism are (a) No Objection Certificate; (b) Consent and (c) Standards.No Objection Certificate is required in the case of new industries and isessentially a site clearance to be obtained by the entrepreneur from theconcerned state pollution control board for the proposed project. Thecertificate is to be issued after considering the impact of the proposed projecton the specified environment, topographical and climate features, biologicaldiversity in the area, compatibility with land use, proximity to protected areasand to human settlement. After the completion of the project and beforecommissioning the industrial process the entrepreneur is required to takeconsent. Consent is given subject to the installation of all required pollutioncontrol equipment to abate pollution. Standards refer to specific parameterspreviously quantified with respect to measures for disposal, discharge andemission of solid, liquid and gaseous waste into the environment (Kuik et al1997).

The pollution control boards have necessary powers to enforcepollution standards and compel industries to adopt either clean technologiesor clean-up technologies whichever seems to be appropriate. Three majortypes of emission standards such as concentration based (eg., suspendedparticulate matter, fluoride), equipment based (eg., for control of sulphurdioxide emissions) and load/mass based (prescribed for industries such asfertiliser, copper etc) standards are prescribed (Sankar 2001).

The government has categorised industries into ‘Red’, ‘Orange’and ‘Green’, according to the descending order of the level of severity ofpollution generated by industries (Kuik et al 1997). It should be noted thatthe government had identified several industries as highly polluting and theyhave been asked to install the required pollution control equipment and actionhas been initiated against the violators. Out of the total 1,551 large andmedium units identified in 1992 in the 17 categories of highly pollutingindustries, 1,349 industrial units have installed the requisite pollution controlequipment, 179 units have been closed down and 23 units have yet to installthe necessary pollution control facilities (as on June 30 2002). (Governmentof India 2003). The Economic Survey 2002-03 observes that out of 726industrial units along the major rivers and lakes in the country, which havebeen found discharging their untreated or partially treated effluents into thefreshwater bodies including rivers and lakes, as on September 30, 2002,only 409 firms were complying with the prescribed standards and 178 hadETPs which were not operating satisfactorily. Three industrial units were


getting their ETP installed and 130 industrial units had been closed down.Only six units have not installed the requisite pollution control facilities.

However, it may be noted that small industries confront severalproblems for controlling pollution because of their smaller size, insufficienttechnical knowledge, financial bottlenecks and even limited managerialcapabilities. All these are serious impediments for treating effluent byindividual units. Common effluent Treatment Plants have been advocatedas a cost-effective solution for compliance with the standards for small-scale polluting units in the industrial clusters/ estates. The MoEF, with theassistance of World Bank under the Industrial Pollution Control Project(IPCP), initiated a scheme to provide financial assistance to clusters ofsmall scale industries constructing such CETPs. This scheme, whichoperated from November 1992 to end of March 1999, has resulted in theconstruction of a large number of CETPs spanning the entire country.

Besides the above measures, submission of an EnvironmentalStatement by polluting units has been made mandatory. The EnvironmentalStatement enables the units to take a comprehensive look at their industrialoperations and facilitates understanding of material flows and focus on areaswhere waste reduction and consequently, savings in input cost is possible.

3. Infrastructure DevelopmentPhysical infrastructure such as roads, railway, airports, ports, power

supply and communications is the lifeline of an economy. Added to this listwe often see water supply and sanitation. These are the intermediateservices essential for the conduct of production and commerce. Inadequateinfrastructure services in terms of quantity and quality can create seriousbottlenecks for economic activity. These services also have an impact onthe quality of life. Recognition of the importance of these services ineconomic growth and development led to substantial provision of publicresources for investment in these sectors. The share of energy, transportand communication in public sector outlay has been around 25 per cent inthe Five Year Plans. The trends in the output of infrastructure sectors, interms of GDP in constant prices are summarised in Figure 24.

In terms of output, there has been a growth of infrastructure outputover the years. However, the adequacy of infrastructure services has alwaysbeen a concern, especially with the opening up of the economy to importcompetition. The trends in infrastructure development in terms of physicalindicators are provided in Table 35.

One of the main factors limiting the development of infrastructurehas been its dependence on public resources for investment.


Figure 24. Trends in the Output of Infrastructure Sectors: Share(%) in GDP in Constant Prices

Source: EPW (2002)

Table 35. Trends in Infrastructure Development (Per ’000Population)

Population Road Length Power Railway Telephones Post BankMillion (surfaced)Km Generated length Offices Branches

ThousandKWH

1950-51 359 0.44 14.21 0.15 0.47 0.10 0.011960-61 434 0.61 38.94 0.13 1.07 0.18 0.011970-71 541 0.74 103.14 0.11 2.39 0.20 0.021980-81 679 1.01 177.91 0.09 4.10 0.21 0.051990-91 839 1.22 315.02 0.07 7.18 0.18 0.072000-01 1,007 2.51* 496.03 0.06 32.99 0.15 0.07

* Data available for 1998-99Source: Government of India (2000a) and Reserve Bank of India (2001)

Commercialisation of infrastructure services has been recognised by thegovernment, as an important pre-requisite for attracting private investmentin this sector. Commercialisation requires a number of institutional changesin the reduction and provision of these services (Mohan 1996). Whilecommercialisation has proceeded, technological changes have also provideda new impetus to the development of infrastructure, particularly in the areaof communication.


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C o m m u n i c a t i o n & S t o r a g e

Power• Government has projected doubling of the existing power generation

capacity by adding 100 thousand MW and substantial investment intransmission and distribution. These efforts are projected to cost Rs.8trillion or 40 per cent of current GDP. These investments are projectedover the next ten year period.

• Only 175 of hydro power potential in the country (150 thousand MW)has been tapped. X plan has allocated 60 per cent of budgetary supportto hydel projects.

• A key problem in the development of power sector is the financialweakness of the state owned distribution companies. The policy reformshave aimed to address this issue through several institutional changes.One is the setting up of independent electricity regulatory commissionswith powers to specify tariff structures for electricity besides arbitratingon issues between power producers, suppliers, distributors andconsumers. A new Electricity Bill, 2001, is in the process of beingenacted in the Parliament, which seeks to provide a legal frameworkfor enabling reforms and restructuring of the power sector.

Telecom• The tele density, number of phone lines per 100 persons of the population

increased from 3.6 in March 2001 to 4.9 in December 2002. This is stillwell below China (13.8 in 2001) and Brazil (21.8 in 2001). The NewTelecom Policy of 1999 has made the task of providing telecom servicesthe responsibility of private companies and public sector companies ratherthan the government itself. The Telecom Regulatory Authority of Indiaprovides the regulatory framework for the sector.

• The total telephone connections as on March 31, 2002 were 45 millioncomprising of 38.2 million fixed lines and cellular connections providedby the public sector; 0.6 million fixed lines and 6.2 million cellularconnections by the private sector. The total lines at the end of the year2003 were 50 million.

• The telecom reforms have led to sharp reduction in tariffs for theconsumers and improved access. Between 1999 and 2002, the tariffrates in the long distance segment came down by about 50 per cent.

• To enhance tele-density in rural and remote areas, Universal ServiceObligations have been a part of the telecom policy. According to thispolicy, every village is expected to be provided with Public Call Officeby December 2002. Out of the 607,491 villages in the country 510,773villages were provided with public telephones by the end of December2002.


• Telecom is a major recipient of Foreign Direct Investment (FDI).Between August 1991 and June 2002, Rs.9,528 crore FDI was received(about $3 billion). The current expectation is that the FDI inflows would,by about $2.5 billion per year. The ‘Convergence Bill’ was introduced inthe Parliament in August 2001. The Bill aims at providing a regulatoryand licensing authority for telecom, broadcasting and multimedia.

Roads• India has a road network of over 3.3 million kms. The network

comprises of national highways, state highways, district roads, ruralroads and special purpose roads (military, ports etc). The NationalHighways span 58,112 kms and account for 45 per cent of the totalroad transport demand.

• India started a major road improvement programme in the year 2000.The National Highway Development Project comprises of 5,846 kmsGolden Quadrilateral connecting the four metro cities (Delhi, Mumbai,Chennai and Kolkota) and about 7,300 kms long North-South, East-West corridors. The entire project is stated to be completed by the year2007. The estimated total cost of the project is Rs.30,300 crore (at1999 prices) or US $80 billion. Innovative financing mechanisms havebeen proposed to bring in private sector in the management of the roadinfrastructure.

Ports• There are 12 major and 184 minor ports along India’s coast. Major

ports handle about 75 per cent of the port traffic in the country. Thetotal capacity of the major ports was 344 million tonnes as on March 31,2002. The X Five Year Plan projects the capacity of the major ports to470 million tonnes.

• Private sector participation in the development of ports has begun.Corporate structure for the management of ports is being consideredfor the future to improve the functioning of the ports.

Railways• Spread over 63,140 route kilometres, Indian Railways is one of the

largest railway systems globally. About 25 per cent of the network iselectrified. Indian Railways is public utility service under the Centralgovernment. A number of new initiatives have recently been taken toenlarge the role of railway transport. State governments have begun toparticipate in funding the expansion of railways within the respectivestates.


Civil Aviation• Surge in trade and tourism activities in the 1990s also saw the expansion

of air traffic. There are new private sector companies providing airtransport services besides the public sector airlines. Private sectoraccounts for about 50 per cent of the domestic air traffic. Majorupgradation of air port facilities has begun around the country. Privatesector participation in the development of new airports has also nowbeen an accepted policy framework.

Urban Infrastructure• About 300 million of India’s population live in urban areas. There are

35 cities in the country with population of more than 1 million and theyaccount for 37 per cent of the total urban population. The issues ofmeeting the needs of water supply, sanitation, solid waste management,urban transport and managing congestion are a major challenge in allthe urban areas. A number of references relating to land regulations,rent/tenancy regulations and related administrative mechanisms arenecessary before major private investments in urban infrastructurebecome a reality. Mass transport systems are yet to be developed inmost of the major cities. Major investments in urban infrastructurewould be necessary to improve the efficiency of the urban economyand improve the quality of life for the urban population.

Rural Infrastructure• The major emphasis in the government programmes in building rural

infrastructure has been the development of roads, rural electrificationand water supply and sanitation programmes. The X Plan aims atproviding road connectivity to all rural habitations. There were 160,000such rural areas without road-connectivity. The government policy alsoaims at achieving 100 per cent electrification of rural areas by 2007. Atpresent, about 77,000 villages await electricity supply.

The importance of development of energy sector for sustainingeconomic development was well understood in economic policies right fromthe beginning of the Five Year Plans. Development of the energy sectorrequired not only the power generation facilities but also the sources ofenergy or fuels. Coal has been the prime source of energy in India given itsabundant supply. Thermal power plants based on coal generate about 60per cent of total power generated in the country. The other fuels such asnatural gas, LNG and diesel account for 5 per cent of total power generated.The hydropower facilities account for 35 per cent and the other sources


including nuclear facilities generate the balance of 5 per cent of power.Besides power, energy demand for transportation and other uses such ascooking has been increasingly met by petroleum products such as petrol,diesel, kerosene, liquid petroleum gas (LPG), natural gas and aviation fuel.The oil price shocks in the international markets and the volatile externalsecurity environment led India to develop its own sources of hydrocarbons.Oil and gas exploration in the off-shore and on-shore sites led to new sourcesof oil and natural gas. However, India is still dependent on imports for about70 per cent of all its requirements of crude and petroleum products eitherfor refining purposes or for direct use.

Power generation and supply are still in the public sector, althoughprivate enterprises are permitted to generate power. More reforms in thepower distribution are anticipated, which, on implementation, should lead togreater efficiency in the sector and economically viable energy sector.

Realisation of limits on the existing sources of fossil fuels, primarilythe hydrocarbons, has led to a search for renewable sources of energy.Often formed the ‘non-conventional energy sources’, solar, wind and hydroenergy are now tapped wherever it is commercially feasible. In the case ofhydro energy, the development of small hydro power projects or the ‘minihydro projects’ has received major policy support in the 1990s.

Besides power, two other types of infrastructure essential foreconomic activity are transportation and communication. In both the areas,emergence of new technologies has led to reduction in the cost of theseservices to the consumer.

Transportation sector includes road, rail, air and sea movements ofgoods and people. The importance of all modes of transport for ageographically spread out country with long seashores is evident. In the1990s, many areas of transportation sector were opened up for developmentby the private sector besides the continued role for the public sector. Eventhe development of roads, airports and seaports is now open to the privatesector subject to specific procedural requirement.

Communications, particularly telecommunications have beenrevolutionised in the 1990s. Emergence of wireless or mobile telephoneshas made expansion of telecommunication faster and cheaper. In combinationwith the expansion of Information Technology (IT) industry and spacetechnology, telecommunication has been able to extend its reach across thecountry and the quality and quantum of services have seen manifold increasein the 1990s. Again, private sector participation in telecommunication hasimparted new dynamism in this segment of infrastructure.


4. Globalisation and Modernisation of the EconomyGlobalisation of economy was rapid in the 1990s. Trade volumes

grew sharply and more distinctively, movement of international capital flowsexpanded. India’s trade volume rose by an average of 2.7 per cent in the1990s as compared to -3.4 per cent in the 1980s. India’s economic reformsof the 1990s place Indian economy in a position to benefit from the expandingglobalisation. India’s share in the world increased by about 50 per centduring the 1990s, but her share in world trade is still under 1 per cent evennow. As a signatory to many of the multilateral agreements on trade andinvestment India benefits from the rule-based trade and investment flows.India has also been upgrading the systems of financial markets andsupervision to facilitate global transactions.

Table 36. Some Measures of Modernisation of the Economies(Year 2000)

Population Electric Telephone Mobile TV Sets Personal InternetMillions Power Mainlines Phones Per 1000 ComputersUsers

Consump-per 1000 per Popula- per 1000 per 1000tion Per Population 1000 tion Popula- Popula-Capita Popula- tion tionKWH tion

India 1,016 379 32 4 78 4.5 4.92China 1,262 759 112 66 293 15.9 17.83Brazil 170 1,811 182 136 433 44.1 29.41Sri Lanka 19 255 41 23 111 7.1 6.42Low Income 2,460 358 23 5 91 5.1 3.80Middle Income 2,695 1,393 139 93 275 33.1 32.40High Income 903 8,496 604 532 641 392.7 298.81

Note: In the case of Electric Power data is for 1999Source: World Bank (2002)

As one of the largest economies in the world, India needs toconstantly improve technology and productivity not only to meet the needsof her citizens but also to play a positive role in improving the living conditionsglobally. For this, modernisation of her economy is a necessity. India is stillbehind several developing economies in modernising her economy (Table36).

Some of the strategies needed to achieve this modernisation orhigher levels of productivity are (1) opening up the economy for greatercompetition, technology transfers and benefit from mutual expansion ofmarkets from the trade partners, (2) building human resources througheducation and training of the labour force, (3) building adequate infrastructure


for the efficient functioning of production systems, and (4) improving thesystems of governance to allow growth of entrepreneurship and ensuringrule of law. The economic reforms of the 1990s have focussed on many ofthese elements. There is a push towards building better infrastructure,which includes financial and social infrastructure besides physicalinfrastructure, providing institutions to ensure enforcement of regulations,opening up of the economy both within and externally for trade andinvestment. India today receives about $2 billion of FDI per year as againstless than $0.2 billion in 1990. The equity fund flows are now close to $2billion as against $0.1 billion in 1990. The total foreign capital flows intoIndia are only a fraction of such flows to China. But the continued reformsare likely to raise international capital flows to India.

The FDI flows into the country are expected to provide impetus tothe exposure of domestic firms to global standards of technical, managerialand financial inputs in industry. While the flows are still small (less than 1per cent of GDP per year), they are directed towards a variety of sectors(Figure 25).

Globalisation has also been catalysed by technological innovationsin information communication and processing. India has achieved somesuccess in securing a place in the IT sector internationally, particularly insoftware and IT enabled services. Indian IT sector has grown from about$5 billion in 1997-98 to $16.5 billion of output in 2002-03. The softwaresegment accounts for 80 per cent of the market and the export segmentaccounts for 80 per cent of the software market. The IT sector output isnow slightly more than 3 per cent of India’s GDP. Valued at $9.9 billion in2002-03, software and services exports account for 20 per cent of totalcurrent account receipts. The export market for IT software has movedtowards greater share of ‘offshore’ services. Thus, developing necessaryinfrastructure within the country has been important for the growth of IndianIT industry. Within the export segment software market, 3.5 per cent of therevenues are form banking, financial services and insurance. In the domesticmarket, IT and telecom sectors account for the bulk of the IT business.Financial sector accounts for another 21 per cent of the revenues andmanufacturing 15 per cent. In terms of growth, the export market has grownfaster than the domestic market so far.

Technological advances in IT, telecommunication and adoption ofthese technologies to other areas of the economy have created entirely anew set of economic activities. The software requirements of applicationof IT in manufacturing, trading, finance, government administration and


business have created a new industry and India has been able to benefitfrom this development at the global level. The IT industry in India today isessentially the software industry and its business is in the internationalmarkets.

Application of IT in the traditional sectors has also led to the spreadof IT industry in the domestic markets. Expansion of IT industry has meanta change in the structure of demand for inputs in the economy includingdemand for natural resources such as water and energy. Expansion ofemployment in the IT industry is an important avenue for the rising labourforce in the economy. Combination of IT and telecommunications has led tothe expansion of a variety of IT enabled services. India has begun to emergeas an important source of such services at the global level. The ‘backoffice’ work for businesses and the ‘front office’ work for client servicesare now being outsourced from developed countries to developing countriessuch as India. The types of services that are now being outsourced arevaried and the potential for such trade in services has been estimated to belarge. This rise in ‘Business Process Outsourcing’ has been a globalphenomenon as ‘cheaper’ labour inputs in developing countries provide costeconomies to enterprises in developed countries. However, as inmerchandise trade, expansion of BPO will need to overcome domesticpressures for protection in the economies where existing business units willsee competitive pressures from global service providers.

Figure 25. Sectoral Shares of FDI (Percentage Distribution)

Note: Inside ring: 1998–99; Outside ring: 1991–97

Source: Government of India (2001d)


11%4%

7% 9%5%

11%

16%

10%16%

8%

3%

Food Processing 5%

Textiles and Leather Products

1%

Chemicals and Fertilisers

12%

Miscellaneous2%

Other Intermediates

9%Telecom

15%

Other consumer goods

2%

Transport20%

Machinery13%

Fuels10%

Services11%

There are other areas where the potential for India’s exports isbeginning to emerge. For instance, biotechnology is one area where Indiamay play an important role at the global level. Behind these new promisesof commercial advantages is the growth of skilled and educated labourforce of the country. Modernisation of the economy requires literate, bettertrained, skilled and healthy labour force. India is home to one of the largestpools of scientific and technical manpower. Global markets provide anopportunity for greater economic returns to the resources. Bringing servicesunder the multilateral trade agreement will provide greater opportunities forglobal trade.


CHAPTER IV

SUMMING UP

This review of national development policies and priorities has beencarried out in the context of vast changes in the economic policy frameworkin the decade of the 1990s. There has been a transformation of the Indianeconomy from one of a relatively persistent slow paced growth in comparisonto the more successful economies of East, South-east Asia and China toone of the fast growing economies in the world in the two decades of 1980sand 1990s. This change has led to renewed emphasis on achieving significantreduction in poverty and providing basic minimum services such as healthand education to its citizens. Although India is still among the poor countriesin the world with a per capita GDP of US $460, its skilled labour force,strong technical capabilities and increasing openness to trade and investmenthave raised the potential for sustained faster economic growth. The X FiveYear Plan has set a goal of 8 per cent annual growth in GDP.

The review of development policies and priorities presented in theprevious three chapters identifies key areas of focus in government policiesin the past development efforts while maintaining the perspective ofsustainability in the development process. Both development and sustainabilityare multidimensional concepts. We have attempted to keep this breadth ofthe context in view in the discussion of development policies and strategiesin India. The changing concerns of public policy are traced through theirevolution in the Five Year Plans that reflect systematically the overall nationalgoals and policies towards development.

Our attempt here has been to document the policy concerns andprovide as far as possible indicators of outcome of the policies. We do notattempt to analyse effectiveness of policies or provide alternativeapproaches. The main points that emerge from the review presented in theprevious chapters are summarised in the following paragraphs.

I. Development Policy Objectives and PrioritiesIn pursuit of a unity of development purpose in the context of its

diverse social and cultural milieu, after independence, the nation adopted ademocratic and constitutional form of government, which was also federalin nature. Planning, a participatory process with the involvement of all sectionsof the society, was adopted as an approach to development policy. Giventhe prominence given to planning in economic policy the FYPs provided the‘expression’ to official policy stance of the government from time to time.We have referred to the Plan documents to trace the changing policy

concerns in the past five and half decades since India’s independence. Whilethe objectives of elimination of poverty and raising the standard of living ofpeople remained, in all the ten FYPs formulated to-date, objectives enunciatedin different plans reflected changing concerns of the times. The issue ofsustainability of economic development has also been a recurrent theme inIndia’s economic policy debates.

1. Standard of Living: Income, Consumption and Social IndicatorsImproved economic growth performance in the 1980s and 1990s

relative to the slow pace of GDP growth until the end of the 1970s has ledto greater confidence in planning for even better performance in the XFYP. The rise in GDP is also marked by rising contributions from non-agricultural sectors. The Indian economy is witnessing a swifter movementto the tertiary sector with the services registering faster rate of growth thanthe other sectors, particularly, in 1990s.

The level of per capita income and the average level of consumptionincreased over time, at swifter pace since 1980-81. Moreover, the patternof consumption shifted in favour of non-food items over time and in favourof consumer durables within the non-food items. Again, within the fooditems, there is a shift from basic foods such as cereals and pulses to protectivefood such as fruits and vegetables, milk, meat and fish.

The other indicators of development, besides GDP and consumption,point to the significant development gaps. The rise in the proportion ofpopulation who possess basic literacy has been very slow with a significantgap between literacy rates among males and females and those in urbanand rural areas. However, the ‘enrolment ratios’ have increased over timefor children in the age group of 5-10 years where the basic primary educationis imparted. Improvements in the health status in terms of lower infantmortality rates (from 115 per thousand in 1961 to 71 per thousand in 2001)and higher life expectancy at birth (from 32.1 years in 1950-51 to over 60years in 2000-01) is noteworthy. Death rate per thousand has fallen from27.4 in 1950-51 to over 8.5 in 2000-01, the birth rate from 39.9 to 25.8during the same period.

Improvements in health infrastructure and manpower in government,voluntary and private sectors have been considerable. The technologicaladvances and better access to health facilities have also contributed toimprovement in the health status of the population. Nevertheless, the currentlevel of health indicators are still extremely low, far below the levels seen indeveloped economies and in several of the developing economies as is evidentfrom the low ranking of India in the Human Development Index.

Summing Up 119

2. Regional Dimensions of DevelopmentGiven the large geographical size of the nation and the differences

in resource endowments, the development experience of the country hasvaried at the regional level within the country as seen from the averagelevels of per capita state domestic product across states at different pointsof time. For example, in terms of average levels of GSDP, among the majorstates, Delhi had the highest per capita GSDP in 1980-81, which was 4times the level of Bihar with the lowest per capita GSDP.

Regional variations in terms of development indicators such aseducation and health are also wide. Literacy rate was the highest in Keralaat 90.92 per cent in 2001 while it was lowest in Bihar at 47.53 per cent. Theinfant mortality rate was the lowest in Kerala at 16 per thousand live birthsin 2001 and the highest in Orissa at 98 per thousand. Similar differences inthe case of life expectancy at birth have also been observed and Kerala hasthe top rank in the Human Development Index computed by the PlanningCommission. These regional variations emphasise the need for local initiativesin policy and regional focus in centrally implemented policies to achievebalanced development.

3. Poverty Reduction, Inequality and EmploymentReduction in poverty has been a major objective of government’s

economic policy. But measured in terms of the ‘head count ratio’ the successof policies in reducing poverty was marginal until the 1970s. However, froma level of 54.9 per cent in 1973-74 for rural and urban population combined,the incidence of poverty declined to 36 per cent in 1993-94 and an estimated26.1 per cent in 1999-00.

While the reduction of poverty by 50 per cent of the initial ratiobetween 1973-74 and 1999-00 is significant, the level of incidence is stillhigh. Using the norm of US $1 per day, nearly 25 per cent of the world’spoor are in India and 75 per cent of her poor reside in rural areas. In absoluteterms there was larger number of poor people in the urban areas in 1999-00than in 1973-74 and one of the factors swelling the ranks of urban poor isthe attraction of the urban areas to rural poor as a source of employment.An analysis of the regional dimension of poverty reveals that the states withlow per capita GSDP are also those where incidence of poverty is greater.The states of Uttar Pradesh, Madhya Pradesh, Orissa and Bihar where theper capita GSDP is the lowest are also the states where the incidence ofpoverty is the highest.

The trend in estimated measure of expenditure distribution for thevarious years since 1950s shows a decline in the measure of inequality


between 1953-54 and 1999-00 in both the rural and urban areas. In the lasttwo decades of 1980s and 1990s, the rural areas show a decline inconsumption inequality while in the urban areas the trend is one of increasinginequality.

Generation of employment for the growing labour force is amongthe main objectives of development policy. At the sectoral level agriculturehas been the largest employer of labour force. However, there has been agradual decline in the share of agriculture in total employment over theyears. The projected share of agriculture in total employment is 51 per centif the targeted growth rates in the X FYP are achieved.

There is a dichotomy between ‘organised’ and ‘unorganised’ sectorsin India. Only about 8 per cent of the total workforce in the country is in‘organised sector’ which has greater protection from retrenchment andaccess to some minimum benefits under labour laws. Public sector is amajor component of the ‘organised sector’. However, from a high of a 72per cent of organised employment, the share of public sector has declinedto 69 per cent in 2001.

4. Sustainability of ProgressThe sustainability of economic growth and development has been

constantly emphasised in the planning process. While the focus in the initialyears of planning remained on issues such as raising the investment andsaving rates to sustain overall economic growth, achieving regional balancein growth, the concern on the optimal use of natural resources has also beenhigh on policy agenda.

(a) Economic VulnerabilitiesThe need for higher government expenditure and the consequent

resource mobilisation measures began to affect adversely from time to timethe macro-economic stability as reflected in periodic high inflation rates,large current account imbalances and high levels of public debt. Financingthe current account deficit through external borrowing was always achallenge for the Indian policy makers during the period when India waspursuing an import substitution policy. The rise in CAD to 3 per cent ofGDP in 1991 led to a crisis and the response was a major overhaul ofexternal trade and finance policies. There was a rapid improvement in theCAD relative to the pattern seen in the earlier episode following the crisisof the mid-1950s.

External events such as sharp oil price hikes, wars or shocks suchas drought and floods also caused disruption of markets, scarcities of goods

Summing Up 121

and high inflation. The government stock of food grain has been used tosupply grain at a subsidised price to the consumers increasingly by targetingthe poor households for these supplies. The government stocks of foodgrainreached a record level of about 50 million tonnes during 2002, which isalmost three times of the requirement of PDS.

India launched a series of wide ranging programmes of economicreforms in response to the macro-economic crisis of the 1991, of whichtrade liberalisation was a major part. Several restrictions on internationaltrade were removed and foreign investment regulations were liberalised.Exports received a push with the liberalisation of foreign exchange marketand a devaluation that accompanied.

The central government’s fiscal position had reached anunsustainable point with much of its borrowing necessitated by debt servicingobligations. The gross fiscal deficit of the central and state governmentsremained close to 10 per cent even in 2002-03. The large deficits havemade maintaining developmental expenditure levels more difficult. The shareof non-development expenditures which include items such as interestpayments on past loans has been rising and the government has respondedby focusing on areas where markets are less likely to be adequate andallow market mechanisms to deliver economic growth more efficiently.

Food security, energy security, macro-economic stability are policygoals necessary for ensuring sustainability of development progress.

(b) Natural Resource VulnerabilitiesIn the context of the environmental concerns, the VI FYP, launched

in 1980, for the first time, made environmental protection as one of theexplicit objectives of the Five Year Plan. The VI FYP also proposed, “aspeedy development of indigenous sources of energy, with proper emphasison conservation and efficiency in energy use”. In the VII FYP, whichstarted in 1985, greater attention was given to policies concerning the use ofnatural resources and the state of the environment. The VII FYP emphasised‘optimal use’ of resources rather than merely focussing on exploitation ofthese resources for more growth. It drew attention to the linkage betweenthe state of environment and poverty in noting that the environment is undersevere threat from the pressure generated by population growth, povertyand misuse/unplanned use of natural resources.

The IX FYP proposed social mobilisation and participation of peopleat all levels to ensure environmental sustainability of development process.The IX Plan laid stress on evolving methodologies for natural resourceaccounting to enable informed decisions on development programmes with


respect to their impact on the wealth of natural resources in the country.

Land: The VIII FYP pointed to the decline in per capita availability of

land. With the assumed rate of population growth it will decline to 0.3hectares by 2007 from 0.89 hectares in 1950. For the animal population thedecline is from 1.1 hectares in 1995 to 0.6 hectares by 2007.

Over the years, land resources in India have suffered from differenttypes of degradation due to both biotic and abiotic causes. Intensiveagricultural practices, which rely heavily on water, chemical fertilisers andpesticides, cause problems of water logging and salinity. Out of the totalgeographical area of about 328.7 million ha, almost 187.8 million ha (57 percent) are under different types of degradation. Almost 45.3 per cent of thetotal degradation is due to water erosion. Due to widespread degradationvast areas are considered as wastelands.

Water:The concern on the optimal use of water with respect to its

conservation was less conspicuous in the initial stages of economicdevelopment planning as the emphasis was on the development of waterservices for accelerating agricultural growth. Although the endowment ofwater resources appears to be abundant there are wide variations in theavailability of fresh water in India over different regions and over differentperiods in a year. The pressure on the available water is increasing due tothe growing population. India, which has 2.45 per cent of the world’s landresources, has roughly four per cent of the world’s fresh water resourceswhereas the country’s population is about 16 per cent of the world’spopulation. In 1990, India was ranked at 42nd position among 100 countriesby per capita water availability (IX Plan).

Irrigation would continue to have the highest water requirement,(about 68 per cent of total water requirement) followed by domestic wateruse, including drinking and bovine needs (about ten per cent of the totalwater requirement) in the year 2050. The projected water use per capitaper year in the year 2050 would be about 725-750 m3 as compared to about650 m3 at present.

The problems due to pollution arising from municipal sewage, urbanand rural wastes, industrial effluents, chemical fertilisers and pesticides posea threat to the quality of available water if not managed effectively. Lack ofadequate access to safe drinking water by the population leading to healthhazards is yet another challenge. The National Water Policy 1987 gave

Summing Up 123

priority to drinking water over other uses. Programmes like AcceleratedRural Water Supply Programme (ARWSP), the Pradhan Manthri GramodayaYojana -Rural Drinking Water (PMGY-RDW) are being implemented toprovide drinking water to the rural habitations. For urban water supply, asimilar programme called the Accelerated Urban Water Supply Programmewas launched in 1993-94.

Fishery Resources:India with a coastline of about 8,129 kms is the seventh largest

marine fish producer in the world. Both marine and inland fish productionincreased manifold since 1950-51. The inland fish production is now as highas marine production. A large part of fish production is exported. Thefishery sector has seen ups and downs in terms of production whenalternative production strategies were adopted. Although technically it isdifficult to establish connection between harvesting pattern and the state ofthe fisheries resources, there are now regulations on the harvesting of fish.The government has adopted measures to encourage inland fish production.There are regulations that seek to ensure adoption of sustainable productionpractices.

Forest Resources:The nationally accepted stipulation of 1/3 of land area under forest

cover has been difficult to attain. Although estimates vary, the currentforest cover, some estimates suggest that about 23 per cent of the totalgeographic area of the country is under forest cover. There are indicationsthat area under ‘dense forests’ with a crown density of 40% and aboveincreased during 1997-99.

Forests are harvested for timber, industrial raw material, non-woodforest products and fuel wood. The growth of these outputs has beenslower relative to the growth of the economy. The share of forestry sectorin GDP has declined to less than 1 per cent as compared to 2.7 per cent in1980-81.

The pressures on forest resources are intense. Forest land hasbeen lost to other uses and there is also degradation of forest resourcestock. The National Forest Policies of 1952, 1988 and the ForestConservation Act of 1980 provide a number of instruments for conservation.

Biodiversity Conservation:With only 2.5 per cent of the total land area of the world, the known

biological diversity of India contributes 8 per cent of the global biologicaldiversity. It is one of the 12 mega-biodiversity regions of the world. Forests,


coastline and the tropical climate favour a rich coastal and off-shore marineecosystem. The rapid expansion of agriculture, industry, urbanisation andlarge scale development projects pose threats to biodiversity. India’sconservation efforts include both in situ and ex situ conservationprogrammes. National Parks and Wildlife Sanctuaries have been establishedto promote in situ conservation, while botanical gardens and animal parkspromote ex-situ conservation. India is a signatory to the convention onBiological Diversity 1992.

Energy:The energy strategy for the country now increasingly recognises

the implications of alternative energy choices on environment. Besides theeconomic vulnerability considerations in energy choice, environmentalvulnerabilities also influence the intensity of energy use and type of fuel.The ‘renewable sources of energy’ received attention in the VII FYP. Theconcern there was on meeting the energy needs of the rural economy, toshift from forest based fuels to other commercial forms of energy. The XFYP places environmental protection among the key factors in the energypolicy.

Development of the power sector has been predominantly in thepublic sector. Only in the recent decade, private sector participation in thegeneration and distribution of power has been encouraged as a policy. Theneed for additional financial investments and dismal performance of thepower sector, in general, in meeting the needs of the economy on a sustainablebasis has made private sector participation necessary. This privatisationeffort has been accompanied by regulatory systems.

Population:At over 1 billion, India has the second largest population in the

world after China. The more recent projections show the possibility ofstabilisation of population by 2020. The rise in population is a consequenceof birth rates exceeding death rates. The decline in death rate has beenfaster with improvement in health care, increased availability of food andimproving incomes. The population control programmes, on the other hand,have been gradual in their impact.

II. Strategies for Development

1. Institutions for DevelopmentDecentralisation of Governance:

Establishment of appropriate institutional framework forimplementing various development programmes has been an important

Summing Up 125

component of development policies throughout India’s planning effort. Thedevelopment of democratic and participatory institutional mechanisms wasessential for policy implementation. The 73rd and 74th amendments to theconstitution have given statutory recognition to a three-tier system ofgovernance with Panchayati Raj Institutions (PRIs) at the District (ZillaParishad), Intermediary (Taluk/ Mandal Panchayats) and Village/Gram Sabhalevels (Gram Sabha/ Panchyats) in the rual areas and Urban Local Bodiesin the urban areas.

Co-operatives:The impetus to decentralised governance has been based on a variety

of other experiences. The co-operatives in agriculture have emerged asinstruments of rural development. Its organisational structure provides foractive participation of individuals at the local level. However, the success ofco-operatives in a setting where literacy was low and the society was oftenfragmented into social classes required substantial government interventions.The co-operatives have also been important agents for change. For example,the AMUL model in which dairy farmers were organised into co-operativesto produce, process, and sell milk and milk products prompted the governmentto launch a programme of dairy development. The programme, ‘OperationFlood’, had at its core dairy co-operatives in the villages. Presently, thereare large numbers of product or commodity-oriented co-operatives, such asin sugar, weaver’s co-operatives, dairy co-operatives, fishery co-operativesand so on. In the mid 1990s, there were a total of 0.47 million co-operativesoperating in different sectors with more than 220 million members.

Managing Natural Resources:The development of institutions for involving community participation

in the management of natural resources has been a challenge for programmeimplementation. It was realised that the centralised state control of forestresources with the objective of optimising the production of a few valuabletimber species for commercial and industrial purposes was inadequate inensuring the preservation of forest resources. Driven by the growing concernsover timber requirements and rural fuel supplies and on the basis of therecommendations of the National Commission on Agriculture 1976, thegovernment initiated a massive social forestry programme. The strategywas to raise wood for local needs on common and private lands taking localpressures off natural forests so that they could be used for industrial purposesand environmental conservation. The social forestry programme wasimplemented through different plantation models like farm forestry,


community forestry, strip plantations, and rehabilitation of degraded forestsand development of recreation forests. There were limitations to thisapproach.

The Joint Forest Management (JFM) which followed, is a conceptof developing partnerships between fringe forest user groups and the forestdepartments on the basis of mutual trust and jointly defined roles andresponsibilities with regard to forest protection and development. TheGovernment of India issued policy guidelines for the involvement of villagecommunities and voluntary agencies in the regeneration of degraded forestlands on 1 June 1990 under JFM programme. The policy guideline encouragesnon-governmental organisations, state forest departments and communitygroups to collaborate in managing the state forest lands. About 62,890 JFMcommittees covering an area of 14.25 m ha of forestland (that is, roughlyabout 21 per cent of the total recorded forest area) have been established.

Community participation in natural resources management wasextended in the case of water resources also since it has emerged as amajor challenge to public policy in the recent years. Both irrigation systemand drinking water supply system were beset with several problems ofmanagement. Drawing lessons from the failure of supply-driven approachesin both irrigation and drinking water projects, the recent initiatives havebeen to involve the users in the management of water resources.

Although the idea of community participation in irrigation sectorwas not altogether new in India, the poor performance of large scale systemsmanaged by the government agencies have led to a renewal of the importanceof user participation in irrigation management. The Water Users Associations(WUAs) have emerged as central to the implementation of participatoryirrigation management. The functions of WUAs include acting as aninterface between farmers and the main system management of the irrigationproject as well as other concerned government agencies, water distribution,operation and maintenance of the irrigation and drainage system, collectionof water charges and other user charges, conflict resolution, etc. There isa great deal of variability in approaches to devolution and participation.

A beginning has also been made to involve users in both rural andurban drinking water supply projects. It is based on the expectation thatimplementation of a participatory demand-driven approach will ensure thatthe public obtains the level of service they desire and can afford to pay. Therecovery of operation, maintenance and replacement costs is expected toensure the financial viability and sustainability of the schemes.

Summing Up 127

Poverty Alleviation:The poverty alleviation programmes were basically ‘top to down

approach’ and, therefore, missed some important elements of the solutionto the problem. This turned the focus on decentralisation and enhancedparticipation of the community at large viewed as an alternative paradigmfor development strategy. Providing credit to the poor that enables them totake up economically productive activities was beset with several problems.Micro-finance programmes emerged as an effective instrument of povertyalleviation in this context. The Self-Employed Women’s Association (SEWA)and other micro-finance institutions have devised innovative creditprogrammes to address market failure and to deliver credit to the poor.They deliver small loans to poor borrowers, often, women are organisedinto small groups, provide more accessible deposit facilities and with muchgreater attention to risk management. The process of organising womeninto SHGs started during the IX Five Year Plan.

2. The Mixed Economy ApproachThe planning process provided a position of dominance to the public

sector in economic development. The argument of ‘social control’ overproduction capacity was partly rooted in socialistic ideals but also partly dueto the need for channelling resources for achieving plan targets. There wasa need to step up investment and saving in the economy rapidly and themeans to achieve this led to government interventions in mobilising resourcesand investment. The infrastructure sectors such as electricity generation,transport and communications were nearly the monopoly of the public sector.The role of private sector was visualised in areas where the scale of operationof a unit was small, which meant that agricultural production, trade andsmall enterprises continued to operate in the private sector. The privatesector in industry was tightly controlled with respect to the creation of newcapacities for production and was also subject to a variety of pricing controls.

A reversal of the above policies was observed during 1990s whenit was felt that public sector began to be a burden on the economy’s resources.Instead of contributing to the government’s revenues for implementing variousdevelopment programmes, the public sector began to claim resources formeeting its losses. The industrial policy of 1991 dismantled many of thecontrols on the private sector’s expansion of capacities for production andforeign investment norms were liberalised. The private sector was alsogiven entry into banking and finance. Now, there is an active programme of‘disinvestment’ of government equity in a range of public sector enterprises.


3. Government Expenditure for DevelopmentChanges in the share of different sectors in government expenditure

are indicative of the changes in the priorities of government’s developmentstrategies. There has been a decline in the share of agriculture and industryin the 1990s and increase in infrastructure and services.

There was a step up in expenditures in social sectors includingeducation and health services in the VI Plan but this was not sustained inthe next FYP but subsequently there was some improvement in the level ofspending on social sectors.

4. Regulatory MechanismsConstitutional provisions and legal requirements have been used to

achieve various standards and norms needed for development programmes.A variety of environmental regulations have been enacted to achieve goalsof environment protection and preservation. Besides, national polices in theareas of agriculture, forests, health, education, energy provide regulatorymechanism. India is also a signatory to many of the international multilateraltreaties in matters relating to environment, health, investment, trade andfinance.

The major legislative action in the area of environmental protectioncame into force with the enactment of the Water (Prevention and Controlof Pollution) Act of 1974. Under this Act, Central and State PollutionControl Boards were established which prescribed standards for thedischarge of effluent or the quality of receiving waters. Legislation relatingto forests (Forest Conservation Act 1980), air quality [Air (Preventionand Control of Pollution) Act 1981] was passed. This was followed bythe comprehensive Environment Protection Act (EPA) of 1986.

Constitutional amendments were also made to incorporateenvironmental concerns into development programmes. The 42 n d

Amendment of the Constitution in 1977 enjoined both the state and thecitizen to protect and improve the environment and safeguard forests andwildlife. The 73rd Amendment in 1992 bestowed the Panchayats with theresponsibilities in the area of soil conservation, watershed development,social and farm forestry, drinking water, fuel and fodder, non-conventionalenergy sources and maintenance of community assets.

The various national policies such as the National Forest Policy1988, National Water Policy 1987 and 2002 are moves towards ensuringthe sustainability of natural resources. India has also incorporated the spiritof Agenda 21 of the Earth Summit in Rio de Janeiro held in June 1992 in theform of two policy statements. These are the policy statements pertaining

Summing Up 129

to Abatement of Pollution and National Conservation Strategy. Schemesfor Biodiversity Conservation are also initiated for ensuring proper co-ordination among various agencies concerned with the issues relating toconservation of biological diversity and to review, monitor and evolve adequatepolicy instruments for the same.

The various institutional approaches have been a process of learningand progress. The stimulus to new approaches has been the losses in naturalresources. India loses about 5,310 million tonnes of top soil annually andthat around 130 million hectares of land (45 per cent of the geographicarea) is affected by serious soil erosion. A decline in the quality of forests(crown density) has been observed even though the area under forests hasremained practically the same.

Similarly, there is a decline in water quality of almost all major riversin India. The important substances which pollute water are identified astraditional organic waste, waste generated from industrial activity, chemicalagents for fertilisers and pesticides for crop protection and silt fromcatchments. A survey of 241 Class II towns in 17 states in India undertakenby the CPCB indicates that on an average, 90 per cent of the water suppliedis polluted and that only 1.6 per cent of the total polluted waste water getstreated.

The situation with respect to air pollution is no better. It has beennoted that six of the largest cities in India have severe air pollution. Annualaverage levels of total suspended particulate matter (SPM) in these citiesare at least three times the WHO standard. Industrial pollution is anothermajor concern in India. There were 1,551 industrial units in the countryfalling under the 17 categories of highly polluting industries. Similarly, theshare of vehicular pollution in urban areas is reaching alarming proportions.Indoor pollution is yet another area of serious concern. Women in ruralhouseholds have to cope with a daily pollution load equivalent to spending 1hour in a room that has 40 mg of SPM for every cubic metre of air asagainst a value of 1.2-3.0 mg recommended by WHO. These are theproblems that are driving the search for new approaches and strategies.

Besides the above concerns, the municipal solid waste generated inmost Indian cities is a challenge to urban planners.

III. Development and Sustainability Perspectives

1. AgricultureAgricultural development has been the focus of development policies

because of its obvious role in transforming the rural areas where a majority


of India’s population continues to live. Improvements in crop productioninitially began to focus increasingly on raising productivity per unit of land aslimits of brining more land area under crop production were quickly reached.A package of programmes to raise agricultural output based on high yieldingseeds, irrigation and fertiliser was launched in the 1970s that made Indiaself-sufficient in food production. This green revolution, along with marketsupport by the government has ensured that the bitter experience of thefamines of the 1960s was not repeated.

Indian agriculture now is more intensive in the use of inputs perhectare of land. There is greater use of water, agriculture is more mechanisedthan before. These aspects of agriculture have also raised the issues relatingto depletion of groundwater, increasing salinity and alkalinity of land and theimpact of increasing use of fertilisers and pesticides on environment. Arecognition of these issues is evident in the goal of National AgriculturalPolicy of 2000 which seeks to achieve an output growth in excess of 4percent per year in a manner that is sustainable technologically, environmentallyand economically.

2. IndustryIndustrialisation was a means to achieve economic growth and

development. In the initial years after achieving political independence theplanners expected industry to lead India to become a modern economy.Public sector was given the prominent role in achieving industrialisation. Amajor change in policies was marked with the New Industrial Policy of1991, which heralded a new policy regime in the country that gave greaterfreedom of operation to the private industry. Public sector monopolies andprotective trade barriers gave way to competition of the market place.

Under the new policy regime, there has been a need to re-examineIndia’s policy of support to small scale industries through various fiscal andother incentives. The policy reforms of the 1990s exposed small scaleindustries to greater competition from the larger firms within the countryand import competition from abroad. A strategy that is likely to succeed isthe one that will help the small scale entrepreneurs to shift to those sectorswhere the small scale operations are more competitive and complementaryto the other segments in the industry.

The government policies now require industries to adopt measuresthat contain pollution to safe levels. The small scale units have been providedspecial assistance in complying with the regulatory requirements.

Summing Up 131

3. Infrastructure DevelopmentPhysical infrastructure such as roads, railway, airports, ports, power

supply and communications is the lifeline of an economy. The share ofenergy, transport and communication in the public sector outlay has beenaround 25 per cent in the FYPs. The growth of infrastructure over time hasbeen significant. However, the achievements pale in comparison to theneeds of this large economy and an economy that has to grow faster toraise the levels of living for its billion plus population.

The 1990s have seen policy reforms aimed at attracting privateinvestment to infrastructure sectors. The attempts have been moresuccessful in the case of telecommunication and ports while in the case ofpower the success has not come. The reforms have established regulatorymechanisms to ensure competitive environment and consumer protection.Infrastructure development strategies have also been sensitive to the needsof sustainable development. In the case of energy and other infrastructuredevelopment, environmental impact assessment is necessary.

Physical infrastructure also includes services relating to water supplyand sanitation. Public spending to provide these services remains essential.Private sector participation is likely only when user-charges adequately coverthe cost of delivering the services

4. Globalisation and Modernisation of the EconomyTechnological innovations in production, transport and

communication, financial innovations and institutional changes around theworld have made global production and supply chains more efficient.National economies have come closer through trade and investment linkages.Globalisation and modernisation are interdependent in the sense that upgradingof technologies becomes necessary for participation in global transactions.

India’s trade with other countries has been increasing rapidly, althoughnot at the same pace as the growth witnessed in some of the export-orientedeconomies of East and South-East Asia or China. However, as a share ofGDP, India’s exports and imports are today nearly twice the level in 1990.Foreign investment has begun to flow both in the form of financial capitaland production capital.

Information Technology has emerged as a growth industry for India.Export of computer software services is among the top forex earners forthe economy. The IT enabled services are emerging as global business forIndia. Opening up of the economy in the 1990s by lowering the trade andinvestment barriers have helped Indian economy find new avenues forgrowth. Global markets provide an opportunity for greater economic returns


to the resources. Bringing services under multilateral trade agreement willprovide greater opportunities for global trade for India.

There have been a few recurring themes in India’s developmentpolicies as the objectives of development have been hard to achieve. Thetask of eradication of absolute poverty to meet the basic minimum needsfrom the country remains a task unfinished. There has always been arealisation that economic growth cannot be accomplished without at thesame time attention to food security, energy security, macroeconomic stabilityand sustainable use of natural resources. Many economic policies that wehave reviewed here show attention to sustainability of developmentprogrammes. Democratic processes, participation in global approach todevelopment concerns and willingness to learn from the past mistakes arethe features of India’s policy process that are likely to help achievingsustainable development for this nation.

Summing Up 133

NOTES

1 References to the FYPs are based on various plan documents of the PlanningCommission, Government of India listed in the References section.

2 However, it is worthwhile to point out the discrepancies in the area underforest reported by different agencies. As per the reports of the Forest Surveyof India (FSI) 1999, the recorded forest area of the country is 76.52 million ha.This area has been classified into Reserved, Protected and Unclassified forests,which constitute 54.44, 29.18 and 16.38 per cent of the forest area respectively.According to the FSI assessment, only 63.73 million ha is estimated to be underactual forest cover as of 1999 constituting about 19.39 per cent of the totalgeographical area.

3 Since 1987, the forest cover of the country is being assessed biennially by theForest Survey of India (FSI) using remote sensing technology.

4 The National Accounts Statistics provides data on gross value added fromregistered and unregistered sectors of manufacturing. The unregistered sectorcomprises of establishments a) operating with electricity and 10 or less workers,and b) operating without electricity and 20 or less workers.

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About the Authors

Dr. Shashanka Bhide is the RBI Chair Professor and Head of the RBIEndowment Unit at the Institute for Social and Economic Change. He hasworked in a variety of research areas in applied economics. He has anumber of publications in the area of agricultural economics and macro-economic modelling. His interests include macroeconomic modelling, ag-riculture and development economics. He is currently on leave from Na-tional Council of Applied Economic Research, New Delhi. He receivedhis Ph. D from Iowa State University.

Jeena T Srinivasan has M Phil in Applied Economics from JawaharlalNehru University, through the Centre for Development Studies,Thiruvananthapuram. She has also submitted her Ph.D. thesis in Econom-ics to the University of Mysore through the Institute for Social and Eco-nomic Change, Bangalore. She has participated and presented researchpapers in several international workshops outside India. She was alsoawarded Short Term Overseas Grant under the World –Bank aided IndiaEnvironment Capacity Building Project (year 2001–2) and worked asguest researcher at the University of Namur, Belgium, during January toMarch 2002. Her areas of research interests are development econom-ics, environmental and resource economics.

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